ESMA publishes final guidelines on Markets in Financial Instruments Directive (MiFID) II suitability requirements

The consultation version of the guidelines was already seen by the industry as an important support for a timely and - if possible - pragmatic integration of sustainability preferences into the suitability assessment. The final guidelines have taken over a large part of the provisions from the consultation version unchanged but also contain some significant adjustments, such as:

The query of sustainability preferences:

• Customers should be able to select standardized minimum shares for taxonomy-compliant and sustainable investments when querying sustainability preferences, as is already done in practice.
• It is no longer necessary to query combinations of the various aspects of sustainability preferences.
• All clients (including existing clients) should be given the opportunity to indicate their sustainability preferences as of the entry into force of the provisions on sustainability preferences (02 August 2022).
• ESMA expects that sustainability preferences will be requested from existing clients within one year (by beginning of August 2023).

Change of sustainability preferences:

• If no suitable product can be recommended due to the sustainability preferences of clients, the clients can adjust their sustainability preferences ad-hoc and be limited to the current investment service.
• However, in order to avoid influencing them, details of the planned product offering should only be given after clients have adjusted their sustainability preferences.

Some of these changes were already expected, but others are surprising and probably more difficult to implement in practice. In any case, the present ESMA Guidelines - both the adapted and the now final unchanged passages - are essential for all providers of MiFID II services and should further help to adequately integrate these comprehensive regulatory innovations into the securities day business.