The Italian Securities and Exchange Authority (Commissione Nazionale per le Società e la Borsa) (“Consob”) announced that it has updated its communication regarding the distribution of complex financial products to retail customers. The market regulator said that it made such updates to increase the level of protection of retail customers, who are considered to be vulnerable in the complex financial products market. According to Consob, the complexity of the financial products implies that retail customers are exposed to higher risks. The watchdog, therefore, stated that there is a need for continuous monitoring to ensure that such customers are not exploited because of their lack of market experience.
In the Communication, Consob updated good practices to ensure that financial intermediaries are accountable for their relationship with retail customers. The Communication follows European Securities and Markets Authority (“ESMA ”) opinions regarding “MiFID practices for companies selling complex products” and “Good practices for product governance arrangements.”
Consob identified complex products and emphasized that intermediaries must adopt good practices when providing such products, to ensure they are in line with the target clients’ profiles and to avoid damaging impacts on retail customers.
In the communication, Consob reminds financial intermediaries about their duty to apply criteria of coherence between the products offered and the customers’ profiles. Furthermore, the watchdog stated that it expects intermediaries to submit to the ‘potential clients’ a disclosure concerning the risks (unsuitability) involving the distribution of the complex products. Consob also reminded the intermediaries to exercise specific controls during the entire process of distribution of such products. Finally, intermediaries are expected to implement the Communication as soon as possible and to inform the Authority of decisions and measures adopted.
Enabling Regulatory Solutions
In December last year, Consob blacklisted several financial services platforms considered illegal investment platforms. The lists included names of financial platforms, majorly associated with cryptocurrencies, forex , among others that were providing services in Italy illegally. Consob drew investors' attention to the importance of adopting the greatest diligence so that to make informed investment choices, adopt common-sense behavior, and safeguard their savings. The regulator urged investors to check in advance that financial operators with whom they are investing are authorized and provide financial products whose prospectus has been approved and published.
