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Final EU Guidelines on Cross-Selling Practices Published
12/22/2015
The European Securities and Markets Authority published a final report and final Guidelines on cross-selling practices within the meaning of the revised Markets in Financial Instruments Directive. The Guidelines will apply from January 3, 2017 to the national regulators responsible for the conduct of business supervisory oversight of investment firms and credit institutions when providing investment services and to management companies and external Alternative Investment Fund Managers when they provide investment services under the Directive on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities and the Alternative Investment Fund Managers Directive respectively. Initially, ESMA had consulted jointly with the European Banking Authority and European Insurance and Occupational Pensions Authority on joint guidelines for the banking and insurance sectors. However, following feedback received to that consultation, it was decided that ESMA should adopt guidelines solely on the basis of the revised MiFID. Firms should note, however, that the final Guidelines do not affect their obligations to comply with other conduct of business standards that may be applicable to them.
The final Guidelines contribute to investor protection across the EU by establishing an approach to the supervision of the standard of conduct and organizational arrangements for firms that engage in cross-selling practices, in particular, to the offering of two or more financial products or services as part of a package or as a condition for the same agreement or package. The Guidelines, which include illustrative examples, aim to improve the content of the disclosure, display and communication of price and cost information and of non-price features and risks, improve client understanding of whether the purchase of individual products is possible through enhanced display and communication of options to purchase, adequate training for relevant staff, removal of conflicts of interest in the remuneration structures of sales staff and clarification of the application of post-sale cancellation rights attached to the purchase of one of the products.
View the final report and final Guidelines.
Financial Regulatory Developments Focus