What changed?
On 2 August 2021, a Commission Delegated Regulation was published in the Official Journal (the OJ).
This amends the existing Delegated Regulation (EU) 2017/565 made under MiFID 2 by introducing provisions on integrating sustainability factors, risks and preferences into certain organisational requirements and operating conditions for MiFID investment firms, including in respect of suitability assessments.
The new measures have applied from 2 August 2022.
Please see here for the changes the new Delegated Regulation makes to the relevant parts of the existing Delegated Regulation.
What’s the background to this?
In January 2018, the European Commission's High Level Expert Group (HLEG) recommended that, as a routine component of financial advice, investment advisers should ask about, and then respond to, investors' preferences regarding the sustainable impact of their investments.
To start this process, on 8 June 2020, the Commission launched a public consultation on a proposed Delegated Regulation.
This set out draft provisions covering how investment firms should integrate sustainability factors, risks and preferences into their businesses. (The proposal superseded the Commission's proposal of January 2019.)
The Commission's June 2020 proposals reflected the HLEG's recommendations and also took into account ESMA's April 2019 Final Report on integrating sustainability risks and factors in MiFID2.
The consultation period for the proposed Delegated Regulation closed on 6 July 2020.
On 21 April 2021, the Commission formally adopted a draft Delegated Regulation, setting out its proposals for changes to the MiFID Level 2 Delegated Regulation on integration of sustainability factors, risks and preferences into certain organisational requirements and operating conditions for investment firms
Following consideration of the proposals by the Council of the EU and the European Parliament, the final text was published in the Official Journal on 2 August 2021.
ESMA's Guidelines on suitability requirements
As a result of the above amendments, on 27 January 2022, ESMA launched a consultation on changes to its Guidelines on certain aspects of the MiFID II suitability requirements, last revised in November 2018. (For our summary of the consultation paper, see here.)
The consultation closed on 27 April 2022 and, on 23 September 2022, ESMA published its final report amending its guidelines on suitability assessments to incorporate sustainability preferences. See our client note on the final report here.
On 3 April 2023, ESMA formally published its Guidelines on certain aspects of the MiFID II suitability requirements that will take affect from 3 October 2023 - ESMA’s previous suitability guidelines (6 November 2018) will cease to apply on the same date.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.
Key contacts
If you have any questions, contact a member of the Suitability assessments under MiFID team for assistance:
