From 2 August 2022, a European Commission regulation comes into force (Commission Delegated Regulation 2021/1253 of 12 April 2021) that requires providers of investment advisor and discretionary portfolio management services to collect specific information on their clients sustainability preferences.
The providers are also required to “meet such preferences”, while at the same time meeting their investment objectives and taking into account their financial situation and experience.
This was the subject of a CSSF press release published on Tuesday.
ESMA finalising guidelines
The CSSF stated that the European Securities and Markets Authority (ESMA) is currently finishing the update of its “Guidelines on certain aspects of the MiFID II suitability requirements” in order to take into account the amendments to Commission regulations.
The CSSF indicated that “even in the absence of these guidelines” it expects supervised entities offering such services to “collect and take into account all relevant information related to the sustainability preferences of new clients as from 2 August 2022 onwards”, as well as to update existing client information by the latest at the next regular update of the client’s profile.
Limited sustainability data
The CSSF conceded that “sustainability related, product-level information is only progressively becoming available.” The regulator said it expects supervised entities to monitor developments of the regulatory framework as well as the publication of the ESMA guidelines and “to continue to adapt their processes and governance accordingly.”
Additional sustainability-related amendments to the MiFID II framework will apply from 22 November 2022, as per the Commission Delegated Directive (EU) 2021/1269 of 21 April 2021 on integrating sustainability factors into product governance requirements.
ESMA product governance requirements
The regulator also sought to draw attention to ESMA’s 8 July 2022 publication of a consultation paper prepared in relation to its “Guidelines on MiFID II product governance requirements”. The paper is intended to be read by investors and consumer organisations and “all firms manufacturing and/or distributing products as defined under MiFID II”. This consultation will close on 7 October 2022.