The European Securities and Markets Authority (ESMA) has published a revised version of its AIFMD Q&A.

The AIFMD Q&A has been updated to include the following new Q&A concerning reporting to national competent authorities.

ESMA has clarified that, when a non-EU AIFM reports information to national competent authorities of a Member State under Article 42, it is only those AIFs which are marketed in that Member State for which information must be reported. However, where Member States are applying ESMA's opinion on collection of additional information, (that is where non-EU master AIFs not marketed in the EU have feeder AIFs (EU or non-EU) which are marketed in the EU), AIFMs should also report information on the non-EU master AIF. The same principle applies where the master AIF is established and not marketed in the EU.


The European Supervisory Authorities (ESAs) have published their response to the European Commission on the amendments the Commission proposes to make to the draft regulatory technical standards (RTS) on key information documents (KIDs) for packaged retail and insurance-based investment products (PRIIPs).

The ESAs comprise the European Securities and Markets Authority (ESMA) the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA).

The draft RTS for PRIIPs was endorsed by the European Commission on 30 June 2016, but was rejected by the European Parliament on 14 September 2016. Consequently, the Commission set out its intention to amend the draft RTS to address the concerns expressed by the European Parliament. This intention was relayed to the ESAs in accordance with the procedure in the ESAs' founding Regulations.

The ESAs have now jointly submitted a response letter to the Commission. The response letter stated that the ESAs are not in a position to provide an agreed opinion on the amended draft

RTS as their opinion, whilst adopted at the EBA and ESMA Boards, did not receive the support of a qualified majority of the EIOPA Board. This was due to the fact that the ESAs expressed different views, particularly concerning the treatment of multi-option products, the criteria to determine whether a comprehension alert should be included in a KID, and the provisions in the draft RTS on the credit risk mitigation factors for insurers.

However the response letter highlights that there was a general consensus during the discussions within the ESAs' Boards that the Commission's proposed amendments to the draft RTS relating to performance scenarios, raised comprehension issues, particularly regarding the credibility of the `moderate' scenario if it is either zero, or, once costs are taken into account, indicates an expectation of losses over the whole recommended holding period. The methodology in the ESAs' original draft RTS was still considered to be preferable; using historic returns over a fiveyear period to allow for performance of asset classes, costs and product features to be readily reflected.

In summary, the ESAs consider it important for alternative approaches to be investigated if the Commission wishes to proceed with its proposed amendments to the draft RTS, as although a methodology such as the use of the mean of the distribution of risk free returns, adjusted for dividend yields, this would not discriminate between different asset classes.


The Financial Services Consumer Panel (FSCP) and the International Organization of Securities Commissions (IOSCO) have both issued publications on online investment and advice / automated advice services.

The FSCP has published research and a paper which reports on the consumer experience of online investment and advice services.

The FSCP notes that investment platforms and services in the UK have evolved dramatically over the last decade as regulatory and technological changes have driven the market for online solutions for investors who are unable or unwilling to take traditional regulated advice. Consequently, more and more people with relatively small amounts of money to invest are turning to these online investment services.

However, it is unclear whether these online services are providing regulated financial advice and therefore accepting liability, or whether the customer is transacting `execution-only' and therefore shouldering all the responsibility.

The FSCP finds that many online investment firms fail to:

  • communicate clearly whether they were providing regulated advice or guidance;
  • disclose costs and charges in a way that allows consumers to understand how much they will be paying and for what. Often firms promote `all in' fees that did not include additional costs borne by the consumer;
  • state clearly whether consumers would have recourse to the Financial Ombudsman Service or the Financial Services Compensation Scheme should things go wrong; and
  • use language that consumers understood and often described their portfolios poorly.

The FSCP recommends that the FCA:

  • clarify and enforce existing rules designed to address the problems identified in the research, whether or not regulated advice is being provided;
  • lead an industry and consumer working group to develop simpler, more consumer friendly, language to be used consistently across the sector;
  • ensure firms make clear in what circumstances consumers would have access to the Financial Ombudsman Service;
  • ensure firms present risk profile descriptions and investment choices in a way that is consistent, easy to understand and promotes good consumer outcomes; and
  • ensure firms quoting all-in fees are complying with the current rules on costs and charges.

Contemporaneously, IOSCO has published a report on the IOSCO Automated Advice Tools Survey.

The report finds that online technology tools are having an important impact on the investment advice value chain, including services such as customer profiling, asset allocation, portfolio selection, trade execution, portfolio rebalancing, tax-loss harvesting and portfolio analysis.

A growing number of retail investors prefer to manage their own portfolios using online tools. At the same time, the functionalities and analytics provided by automated advice tools are growing in range and sophistication, while the regulation of internet-based technology continues to evolve.

Consequently, the market for automated investment advice has developed rapidly, expanding into more countries. The continued development of automated investment advice tools requires on-going monitoring to help regulators understand its impact on the provision of investment advice to retail clients.