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15 October 2009

CESR consults on “Understanding the definition of advice under MiFID”


CESR’s paper clarifies and illustrates situations where firms will, or won’t, be considered to provide investment advice, using a question and answer format.

CESR paper seeks to clarify and illustrate situations where firms will, or will not, be considered to be providing investment advice. It does this using a question and answer format. Investment advice is an investment service under MiFID, which is why the distinction is important. The main questions for consideration are laid out in the introduction to “Diagram: the five key tests for investment advice which describes the key tests for determining investment advice and lists the issues to be considered in each case.

 

The main areas focus on topics including:

 

·         the provision of personal recommendations and whether other forms of presenting information such as “investment research, filtering, general recommendations, generic advice, presenting multiple products or access to model investment portfolios could constitute investment advice.

 

 

·         The presentation of recommendations as suitable for clients and the presentation of recommendations based on client circumstances, including making recommendations to become a client of a particular firm, making recommendations which are clearly unsuitable in the light of knowledge of the customer, definitions of a ”person’s circumstances and when recommendations will be viewed as based on a view of a persons circumstances.

 

 

·         Perimeter issues around the definition of personal recommendation, including disclaimers to the client and failing to use known customer information

 

 

·         Issues around the form of communication, including whether the internet is always a “distribution channel, messages to multiple clients, distinguishing corporate finance and investment advice, and whether these are mutually exclusive.

 

Stakeholders are being consulted on their views on CESRs stance in order to determine whether information constitutes investment advice, and whether there are other areas they would like CESR to conduct further work or provide clarification.

Press release

 



© CESR - Committee of European Securities Regulators


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