Changes from report parliamentary committee draft to plenary report

Added7. Records to be kept by the investment firm according to Article 16(6) shall include all marketing communications provided or made accessible to retail clients or potential retail clients, by the investment firm or any third party remunerated or incentivised through non-monetary compensation by the investment firm.

AddedSuch records shall be retained for at least the duration of the relationship between the investment firm and the customer. Those records shall be retrievable by the investment firm upon request of the competent authority.

AddedThe records referred to in the first subparagraph shall contain all of the following:

Added(a) the content of the marketing communication;

Added(b) details about the medium used for the marketing communication;

Added(c) the date and duration of the marketing communication including relevant starting and end times;

Added(d) the targeted retail client segments or profiling determinants;

Added(e) the Member States where the marketing communication is made available;

Added(f) the identity of any third party involved in the dissemination of the marketing communication.

AddedRecords of such identity referred to in point (f) shall contain the legal names, registered addresses, contact details and where relevant social media handle of the natural or legal persons concerned.

Added8. The Commission is empowered to adopt a delegated act in accordance with Article 89 to supplement this Directive by specifying▌:

Added(a) the essential characteristics of financial instrument(s) or investment and ancillary service(s) to be disclosed in all marketing communications targeting retail clients or potential retail clients and any other relevant criteria to ensure that those essential characteristics appear in a prominent way and are easily accessible by an average retail client, regardless of the means of communication;

Added(b) the conditions with which marketing communications and marketing practices should comply in order to be fair, clear, not misleading, balanced in terms of presentation of advantages, costs and risks, and appropriate in terms of content and distribution channels for the target audience or, where applicable, the target market.

AddedProfessional requirements

Added1. Member States shall require investment firms to ensure and demonstrate to competent authorities on request that natural persons giving investment advice or information about financial instruments, investment services or ancillary services to clients on behalf of the investment firm possess the necessary knowledge and competence to fulfil their obligations under Articles 24, 24a, 24b, 24c and Article 25 and maintain and update that knowledge and competence by undertaking regular professional development and training including specific training where new financial instruments and investment services are being offered by the firm. Member States shall have in place and publish the criteria to be used for assessing effectively such knowledge and competence.

Added2. For the purpose of paragraph 1, Member States shall require investment firms to ensure and demonstrate to competent authorities on request that natural persons giving investment advice to clients on behalf of the investment firm possess and maintain at least the knowledge and competence set out in Annex V and undertake at least 15 hours of professional training and development per year, during work hours. Member States shall have in place and publish mechanisms to control effectively and assess the knowledge and competence of natural persons giving investment advice to clients on behalf of investment firms. The mechanisms shall in particular define in which cases additional hours of professional training and development are to be required from those persons beyond the minimum of 15 hours per year, based on the assessment of knowledge and competence. An appropriate number of hours of professional training shall be allocated by national competent authorities to the minimum necessary knowledge in sustainable investments contributing to an environmental or social objective, including how to consider and integrate sustainability factors and clients’ sustainability preferences into the advisory processes. Member States may provide that continuing vocational training acquired and required as a part of another professional qualification can be considered valid. Member States may require that compliance with the criteria set out in Annex V as well as the yearly successful completion of the continuous professional training and development shall be proven by a certificate or any other document recognised by the Union or a Member State.

AddedThe Commission is empowered to amend this Directive by adopting a delegated act in accordance with Article 89, to review, where necessary, the requirements set out in Annex V.’;

Added(14) Article 25 is amended as follows:

Added(a) paragraphs 1, 2 and 3 are replaced by the following:

Added‘1. The investment firm shall assess the suitability or appropriateness of the relevant financial instruments(s) or investment services or transaction(s) to be recommended to, or demanded by, his or her client or potential client in good time before respectively i) the provision of the investment advice or portfolio management or ii) the execution or reception and transmission of the order. Each of these assessments shall be determined on the basis of information about the client or potential client as obtained by the investment firm, in accordance with the below requirements.

AddedThe investment firm shall ensure that the purpose of the suitability or appropriateness assessment is explained to the client or potential client before any information is requested from him or her. The clients and potential clients shall be warned of the following consequences:

Added(a) the provision of inaccurate or incomplete information shall impact negatively the quality of the assessment to be made by the investment firm;

Added(b) the absence of information shall prevent the firm to determine whether the service or financial instrument envisaged is suitable or appropriate for them and to proceed with the recommendation or the execution of the client’s order. Such explanation and warning shall be provided in a standardised format.

AddedThe investment firm shall, upon request of the retail client, provide them with a report on the information collected for the purpose of the suitability or appropriateness assessment. Such report shall be presented in a standardised format.

AddedESMA shall develop draft regulatory technical standards to determine the explanation and warning referred to in paragraph 1, second subparagraph, and the format and content of the report referred to in paragraph 1, third subparagraph.

AddedESMA shall submit the draft regulatory technical standards to the Commission by [OJ: insert date 18 months after the date of entry into force].

AddedPower is conferred to the Commission to adopt those regulatory technical standards referred to above in the fourth subparagraph of this paragraph in accordance with Articles 10 to 14 of Regulation. (EU) No 1095/2010.

Added2. Subject to the second subparagraph, when providing investment advice or portfolio management services, the investment firm shall obtain the necessary information regarding the client or potential client’s knowledge and experience in the investment field relevant to the specific type of product or service and client’s financial situation, including,

Added- to the extent disclosed by the client upon request of the firm, the composition of any existing portfolios,

Added- its ability to bear full or partial losses,

Added- investment needs and objectives including sustainability preferences, if any, and

Added- risk tolerance, so as to enable the investment firm to recommend to the client or potential client the investment services or financial instruments that are suitable for that person, and, in particular, are in accordance with its risk tolerance, ability to bear losses, its sustainability preferences and need for portfolio diversification.

AddedInvestment firms inform clients that there are different types of investment advice. On this ground, clients can decide which type of advice they want to receive.

AddedMember States shall ensure that where an investment firm provides investment advice recommending a package of services or products bundled pursuant to Article 24(11), the overall bundled package is suitable.

AddedWhen providing either investment advice or portfolio management that involves the switching of financial instruments, investment firms shall obtain the necessary information on the client’s investment and shall analyse the costs and benefits of the switching of financial instruments. When providing investment advice, investment firms shall inform the client whether or not the benefits of the switching of financial instruments are greater than the costs involved in such switching.

Added3. Member States shall ensure that investment firms, when providing investment services other than those referred to in paragraph 2, ask the retail client or potential retail client to provide information regarding their knowledge and experience in the investment field relevant to the specific type of product or service offered or demanded,▌ so as to enable the investment firm to assess whether the investment service(s) or financial instrument(s) envisaged is appropriate for the client.

AddedWhere a bundle of services or products is envisaged pursuant to Article 24(11), the assessment shall consider whether the overall bundled package is appropriate.

AddedWhere the investment firm assesses on the basis of the information received under the first subparagraph, that the product or service is not appropriate to the client or potential client, the investment firm shall warn the client or potential client. When the service is provided to a retail client, that warning shall be provided in a standardised format and shall be recorded.

AddedThe investment firm shall not proceed with a transaction subject to a warning indicating that the product of service is not appropriate, unless the client asks to proceed with it despite such warning. Both demand of the client and acceptance of the firm shall be recorded

AddedESMA shall develop draft regulatory technical standards to determine the format and content of the warning to retail clients referred to in subparagraph 3.

AddedESMA shall submit the draft regulatory technical standards to the Commission by [OJ: insert date 18 months after the date of entry into force].

AddedPower is conferred to the Commission to adopt those regulatory technical standards in accordance with Articles 10 of Regulation. (EU) No 1095/2010.’;

Added(b) in paragraph 4, the following subparagraphs are added:

Added‘ESMA shall develop draft regulatory technical standards to determine the format and content of warning to retail clients referred to in the first subparagraph, point (c).

AddedESMA shall submit the draft regulatory technical standards to the Commission by [OJ: insert date 18 months after the date of entry into force].

AddedPower is conferred to the Commission to adopt those regulatory technical standards as referred to above in accordance with Articles 10 of Regulation. (EU) No 1095/2010.’;

Added(c) in paragraph 6, second subparagraph, the following sentence is added:

Added‘The provision of such statement shall be made sufficiently in advance before the conclusion of the transaction to ensure, except if otherwise instructed, that the client gets enough time to review it, and where necessary, obtain additional information or clarifications from the investment firm.’;

Added(d) paragraph 8 is replaced by the following:

Added‘8. The Commission is empowered to supplement this Directive by adopting delegated acts in accordance with Article 89 to ensure that investment firms comply with the principles set out in paragraphs 1 to 6 of this Article when providing investment or ancillary services to their clients, including information to obtain when assessing the suitability or appropriateness of the services and financial instruments for their clients, criteria to assess non-complex financial instruments for the purposes of paragraph 4, point (a)(vi), of this Article, the content and the format of records and agreements for the provision of services to clients and of periodic reports to clients on the services provided. Those delegated acts shall take into account:

Added(a) the nature of the services offered or provided to the client or potential client, having regard to the type, object, size, costs, risks, complexity, price and frequency of the transactions;

Added(b) the nature of the products being offered or considered, including different types of financial instruments;

Added(c) the retail or professional nature of the client or potential clients or, in the case of paragraph 6, their classification as eligible counterparties;

Added(ca) the criteria for assessing the alignment of financial products with a client's sustainability preferences and outlining the procedures for tailoring a portfolio or investment product offering to meet a client's sustainability preferences.’;

Added(14a) in Article 29a, the following paragraph is inserted:

Added‘2a. Investment firms providing investment services to professional clients shall have the right to agree to a limited application of the detailed requirements of Articles 24 and Article 24b, with such clients. Investment firms shall not be allowed to agree on such limitations with regard to investment advice or portfolio management nor, irrespective of the investment service provided, with regard to financial instruments which embed a derivative.’;

Added(15) Article 30 is amended as follows:

Added(a) in paragraph 1, the first subparagraph is replaced by the following:

Added‘Member States shall ensure that investment firms authorised to execute orders on behalf of clients, and/or to deal on own account, and/or to receive and transmit orders have the possibility of bringing about or entering into transactions with eligible counterparties without being obliged to comply with Article 16(3a), Article 24,▌Article 24b, article 24c, Article 25, Article 27 and Article 28(1), in respect of those transactions or in respect of any ancillary service directly relating to those transactions.’;

Added(b) in paragraph 2, the second subparagraph is replaced by the following: