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Will ESMA’s MiFID guidelines on investment advice be effective?

The European Securities and Markets Authority (ESMA) has published its final report on MiFID II guidelines. The guidelines specify criteria for the assessment of knowledge and competence of advisory staff working at investment companies.

The guidelines are due to come into effect on 3 January 2017 and their purpose is to protect investors by improving investment advice and information given to clients about financial instruments and investment services, as well as ancillary services. In particular the guidelines specify the necessary knowledge, competence and assessment criteria for employees in investment companies.

The guidelines – full version available here – state that ESMA is required to publish these guidelines by Article 25(9) of MiFID.

ESMA is required to specify the appropriate qualifications and experience that investment firm advisors should have. However, because education and qualification systems vary widely across EU countries, the precise definition of 'appropriate qualification' and 'appropriate experience' must be addressed at national level by each member state. Therefore, due to the differences in size, structure, sophistication, etc in each EU country, the guidelines are principle-based rather than being “overly prescriptive”.

CTMFile take: Will these guidelines actually make a difference to how investment advice is given out to clients by investment firms? It sounds as though they leave too much interpretation to each EU country and will not create an EU-wide standard guaranteeing transparent, trustworthy investment advice, which is the reassurance that investors in Europe need.

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