Date: 15th September 2023

Retail investors are increasingly concerned about the impact of their investment decisions on society and the environment. In recent years, European Union (EU) institutions have amended the legislation regarding the distribution of retail investment products by investment firms–the Markets in Financial Instruments Directive (MiFID II)–and related delegated legislation and guidelines to define how investment firms are to collect their (prospective) client’s preferences regarding the sustainability.

Following the entry into application of the amendments on 2 August 2022, the European Securities and Markets Authority (ESMA) launched a Call for Evidence (CfE) to gather information about the ways in which investment firms have implemented the new requirements. These new requirements in particular imply additional questions asked to clients seeking advice on financial products, and additional information to be provided by financial advisors.

BETTER FINANCE, as the representative body of European retail investors, has been actively involved with EU policy-makers to ensure that the rules governing preferences collection and advice provisions protect the interests of retail investors, notably ensuring that they receive clear and comparable information.

BETTER FINANCE chose to submit a target response to ESMA’s Call for Evidence. Indeed, as ESMA’s goal with the CfE is to “gain a better understanding of how the MiFID II requirements are being implemented and applied by firms”, most of the questions require data and insights available only to investment firms distributing investment firms to retail clients. Furthermore, the changes that ESMA requests consumers’ views on are still too recent for BETTER FINANCE and its members to have had the time to collect meaningful evidence from retail investors on their “experiences and reactions to the incorporating of sustainability factors within the services of investment firms”.