Trouble viewing this email? Read it online

cummings-logo-2013 (2).jpg

Welcome to EQUITY ISSUES, a short note on a relevant issue in the private equity and venture capital industry.

If you would like to discuss any of the points we raise below, please contact me or one of our other lawyers.


Claire Cummings

020 7585 1406


ESMA final report on suitability requirement guidelines under MiFID II

The assessment of suitability is one of the key requirements for investor protection in the MiFID II framework. It applies to the provision of investment advice (whether independent or not) and portfolio management. Investment firms providing investment advice or portfolio management have to provide suitable personal recommendations to their clients or have to make suitable investment decisions on behalf of their clients. ESMA is mandated to take an active role in building a common supervisory culture among national competent authorities to promote sound, efficient, and consistent supervision throughout the EU, known as supervisory convergence. Therefore, ESMA is seeking a consistent and harmonised application of the requirements in the area of suitability. The suitability requirement guidelines are intended to ensure that the objectives of MiFID II can be efficiently achieved. ESMA believes that the implementation of these guidelines should strengthen investor protection which is a key objective for ESMA.

ESMA recently published its final report on guidelines on certain aspects of the suitability requirements under MiFID II. The guidelines build on the text of ESMA's 2012 guidelines. These have been largely confirmed and broadened to: (i) consider technological developments of the advisory market, in particular the increasing use of automated or semi-automated systems for the provision of investment advice or portfolio management (robo-advice); (ii) build on national competent authorities' (NCAs) supervisory experience on the application of suitability requirements (including the 2012 guidelines); (iii) take into account the outcome of studies in the area of behavioural finance; and (iv) provide additional details on some aspects that were already covered under the 2012 guidelines.

In addition, in the light of the European Commission's action plan on sustainable finance, which was published in March 2018, ESMA has included a good practice for firms addressing the issue raised relating to the product selection process and suitability assessment. ESMA will monitor the legislative proposals under the action plan and consider making focussed amendments to the guidelines to reflect changes to the MIFID II delegated acts on sustainability. The Commission's legislative proposals were published on 24 May 2018. The final report also contains details about the feedback ESMA received to its July 2017 consultation on the guidelines and explains how the responses have been taken into account. The guidelines will be translated into the official EU languages and published on ESMA's website. NCAs must notify ESMA whether they comply, or intend to comply, with the guidelines within two months of the date of publication. The guidelines will apply 60 calendar days after this date. The 2012 guidelines will cease to apply on the same date.

This document is for general guidance only. It does not contain definitive advice.


You regularly receive communications from Cummings Law Ltd ("Cummings") relating to legal updates, invitations to events and other information that may be of interest to you. We believe that we have a legitimate interest in sending these to you and in order to do so we hold your personal data on our database. It is our responsibility to provide you with our privacy policy, which governs the communications that we send to you. In our privacy policy, you will find details about how we use your personal data and how you can exercise your rights in relation to it. If you would prefer not to receive our emails please unsubscribe here or below or at any time by clicking the unsubscribe link which is located at the bottom of every email we send to you.

We have taken great care to ensure the accuracy of this version of Equity Issues. However, Equity Issues is written in general terms and you are strongly recommended to seek specific advice before taking any action based on the information it contains. No responsibility can be taken for any loss arising from, action taken or refrained from on the basis of this publication. If you would like to be removed from the mailing list of this publication please click unsubscribe below. Nothing within this communication may be copied, reprinted or similar withou prior written consent.

Authorised and regulated by the Solicitors Regulation Authority. Please contact us if you would like to arrange a meeting. This message (including any attachments) from the law firm of Cummings is confidential and may contain information which is proprietary, privileged or otherwise legally protected against unauthorised use or disclosure. If you are not the intended recipient, please do not read, copy, distribute, disclose or otherwise use or place any reliance on any information in this message or any attachments; and please alert the sender by return e-mail, delete this message and any attachments from your system and destroy any hard copies. Neither Cummings nor the sender accepts liability for any corruption, interception or unauthorized amendment of messages or attachments transmitted by e-mail. It is your responsibility to scan this message and any attachments for computer viruses in accordance with good working practice. The firm is not authorised by the Financial Conduct Authority, but is authorised and regulated by the Solicitors Regulation Authority (for the code of conduct please see and undertakes certain activities in relation to investments which are limited in scope and incidental to its legal services or which may reasonably be regarded as a necessary part of its legal services.


Tel: + 44 20 7585 1406
Mob: + 44 7734 057 327

Cummings Law
42 Brook Street
London Greater London W1K 5DB
United Kingdom

25 05 2019

Subscribe a friend | Unsubscribe

email sent by multimail