Changes from report parliamentary committee draft to plenary report

Added(a) paragraph 1 is replaced by the following:

RemovedDirective (EU) 2016/97

Added‘1. The home Member State shall require that investment firms comply with the organisational requirements laid down in paragraphs 2 to 10 of this Article, Article 16a and in Article 17.’;

RemovedArticle 2 – paragraph 1 – point 4, Article 9a – paragraph 1 – subparagraph 1 – point b: (b) the scale and scope of the insurance distribution activities carried out in each Member State;

Added(b) in paragraph 3, subparagraphs 2 to 7 are deleted;

RemovedAll information contained in the reporting is useful also as regards the Home Member State, since Home NCAs will find it useful to have the full picture of the firm’s activity, including in its home jurisdiction.

Added(c) the following paragraph 3a is inserted:

RemovedDirective (EU) 2016/97

Added▌

RemovedAll information contained in the reporting is useful also as regards the Home Member State, since Home NCAs will find it useful to have the full picture of the firm’s activity, including in its home jurisdiction.

Added(d) the following paragraph 7a is inserted:

RemovedDirective (EU) 2016/97

Added‘7a. Member States shall ensure that investment firms establish appropriate procedures and arrangements, including electronic communication channels, to ensure that client’s rights under this Directive can be exercised without restriction and that client’s complaints▌ are dealt with properly and without undue delay. Those procedures shall allow investors to register complaints in any language in which communication material or services were provided. In addition to such language, ▌the firm and its clients may, prior to entering into any transaction, agree on the use of an additional language for the purpose of registering complaints. In all cases, complaints shall be registered and complainants shall receive replies within a delay proportionate to the subject matter of the complaint, and in any case no later than 30 working days after a complaint is registered. Any final response shall be made in paper form or through another durable medium, in the language in which the complaints were registered.’;

RemovedArticle 2 – paragraph 1 – point 4, Article 9a – paragraph 1 – subparagraph 1 – point d: (d) for each Member State, the total number of customers, for the relevant period ending on the 31 December;

Added(9) the following Article 16-a is inserted after Article 16:

RemovedAll information contained in the reporting is useful also as regards the Home Member State, since Home NCAs will find it useful to have the full picture of the firm’s activity, including in its home jurisdiction.

Added‘Article 16-a

RemovedDirective (EU) 2016/97

AddedProduct governance requirements

RemovedArticle 2 – paragraph 1 – point 4, Article 9a – paragraph 1 – subparagraph 1 – point e: (e) the number of complaints received from customers and interested parties in each Member State.

Added1. Member States shall ensure that investment firms which manufacture financial instruments for sale to clients establish, maintain, operate and review a process for the approval of each financial instrument and significant adaptations of existing financial instruments before it is marketed or distributed to clients (the product approval process).

RemovedAll information contained in the reporting is useful also as regards the Home Member State, since Home NCAs will find it useful to have the full picture of the firm’s activity, including in its home jurisdiction.

AddedThe product approval process shall contain all of the following:

RemovedDirective (EU) 2016/97

Added(a) a specification of an identified target market of end-clients within the relevant category of clients for each financial instrument;

RemovedArticle 2 – paragraph 1 – point 6, Article 12 – paragraph 3 – subparagraph 1 – point q: (q) impose the use of risk warnings for insurance-based investment products, and, where applicable, underlying investment options in information materials, including marketing communications, where those products and underlying investment options could pose a serious threat to investor protection.’;

Added(b) a clear identification of the target market’s objectives and needs;

RemovedThis power should be broader and not be limited to‘risky products’ only. NCAs may need to impose risk warnings for other reasons than excessive risk.

Added(c) an assessment of whether the financial instrument is designed appropriately to meet the target market’s objectives and needs;

RemovedDirective (EU) 2016/97

Added(d) an assessment of all relevant risks to the identified target market and that the intended distribution strategy is consistent with the identified target market;

RemovedArticle 2 – paragraph 1 – point 6, Article 12 – paragraph 3 – subparagraph 1 – point q a (new): (qa) use webscraping techniques and tools to collect online data for monitoring, surveillance, detection and investigation purposes.

Added(e) in relation to financial instruments falling under the definition of packaged retail investment products in accordance with Article 4(1) of Regulation (EU) No 1286/2014 of the European Parliament and of the Council*, and which are made available to retail clients, a clear assessment and description of both quantitative and qualitative features of the financial product, including:

RemovedNational competent authorites should be enabled to use webscraping tools in order to perform their monitoring, surveillance, detection and investigation activities in view of the new models of communication emerging from social networks and, more broadly, online platforms. This will in particular make them fit to detect online scams and frauds, as well as false rumours aimed at price manipulation.

Addedi)all costs and charges related to the financial instrument,

RemovedDirective (EU) 2016/97

Addedii) ▌whether those costs and charges are justified and proportionate, having regard to the target market’s objectives and needs, and the product’s characteristics, objectives,▌ strategy and performance (‘pricing process’).

RemovedArticle 2 – paragraph 1 – point 7, Article 12b – paragraph 6: 6. In the event of disagreement within the platform and where there are serious concerns about negative effects on policyholders or about the content of an action or inaction to be taken in relation to an insurance or reinsurance distributor, EIOPA may decide to initiate and coordinate joint on-site inspections. In that case, EIOPA shall invite the competent authority of the home Member State, as well as other relevant competent authorities of the collaboration platform, to participate in such joint on-site inspection.

Addediii) additional product features and services that could impact the value and benefits provided to investors.

RemovedIn the circumstances covered by paragraph 6 (disagreement, serious threat), it is justified and legitimate to empower EIOPA to initiate and coordinate a joint on-site inspection. This will be much more efficient than a mere recommendation to the Home NCA, as the Commission proposes.

AddedFor the purposes of the second subparagraph, point (a), the manufacturer shall, as part of the target market definition, assess the type of clients to whom the product is targeted, the knowledge and experience level needed to understand the product, the ability to bear losses, the risk tolerance and whether the product allows the target market to:

RemovedDirective (EU) 2016/97

Added(a) smoothly manage short-term finances to meet short-term needs;

RemovedArticle 2 – paragraph 1 – point 16, Article 25 – paragraph 1 – subparagraph 3: deleted

Added(b) absorb economic shocks; or

RemovedDirective (EU) 2016/97

Added(c) reach future long term goals.

RemovedArticle 2 – paragraph 1 – point 16, Article 25 – paragraph 2: deleted

Added▌

RemovedDirective (EU) 2016/97

AddedThe product approval process shall ensure that the investment firm takes the clients’ best interest into consideration in the manufacturing of the financial instruments and takes into account the intended monetary and non-monetary benefits to the customer.

RemovedArticle 2 – paragraph 1 – point 16, Article 25 – paragraph 5 – subparagraph 3: deleted

AddedAn investment firm shall regularly review the financial instruments it manufactures, taking into account any event or risk that could materially affect the identified target market, to assess whether the financial instrument remains consistent with the objectives, needs and characteristics of the target market.

RemovedDirective (EU) 2016/97

AddedAn investment firm which manufactures financial instruments shall make available to distributors all information on the financial instrument and the product approval process that is needed to fully understand that instrument and the elements taken into consideration during the product approval process, including complete and accurate details on any costs and charges, features, objectives, strategy and performance of the financial instrument.

RemovedArticle 2 – paragraph 1 – point 16, Article 25 – paragraph 6: deleted

Added1a. Investment firms shall ensure that compliance reports to the management body systematically include information about the financial instruments manufactured by the firm, including information on the distribution strategy and the intended monetary and non-monetary benefits to the clients related to the financial instruments. Investment firms shall make the reports available to their competent authority upon request.

RemovedDirective (EU) 2016/97

Added▌

RemovedArticle 2 – paragraph 1 – point 16, Article 25 – paragraph 7 – point a: deleted