EU Regulatory Update

Author: Clerkin Lynch LLP

Date Published 07/03/2022

ESMA Guidance on MiFID II

On 3rd January 2022 ESMA published its final report on its guidance on the “appropriateness” and “execution only” requirements under MiFID II.

It notes that these requirements are an important element of investor protection under this regime and that the purpose of this updated guidance is to enhance clarity and foster convergence in the application of these obligations. It can be noted that in Ireland the Central Bank issued its own “Dear CEO” letter to all MiFID firms in relation to the suitability requirements under MiFID II, as detailed above.

Central Bank MiFID II Client Suitability Focus

The Central Bank issued a “Dear CEO” letter to all Irish authorised MiFID firms in December 2021. The letter follows a common supervisory action (CSA) carried out under the auspices of ESMA earlier in 2021 on the requirements under MiFID II to ensure financial products are suitable for clients to whom they are being sold. The letter outlines the findings of the Central Bank of the review it carried out of certain firms and includes guidance on its expectations to ensure compliance with these requirements. It also includes a helpful list of practices which it deems insufficient.