EFAMA agrees in principle with many of ESMA’s suggested approaches in their consultation on guidelines on certain aspects of the MIFID II appropriateness and execution-only requirements. However, certain, essential elements still require further considerations before finalising these Guidelines.

First, ESMA introduces the concept of “gradients” of complexity for financial products in Guideline 3. This concept is in clear contradiction with the applicable Level 1 and 2 frameworks which simply distinguish between “complex” and “non-complex” products. Such an approach could seriously hinder the distribution of financial products, as some investment firms may start considering a  certain financial product ‘more’ complex while others would see it as ‘more’ non-complex. To ensure uniform interpretation of the rules along the whole value chain, ESMA’s final Guidelines must follow the existing “complex”/“non-complex” framework.

Second, Guidelines 2 and 8 contradict the MiFID II and MiFID II Delegated Regulation by restricting the possibility for clients to proceed with their transactions even after having received a warning. These Guidelines should be brought in line with the overarching framework.

Last but not least, ESMA suggests that a client’s knowledge and experience regarding sustainability factors and risks should be a separate element to be assessed. Such an approach is systematically incorrect and overlooks that experience and knowledge of sustainability factors are a matter of personal attitudes/preferences rather than appropriateness.