Central Bank Dear CEO letter – Investment firms’ compliance with the suitability requirements under MiFID IIDecember 2021
On the 1st of December 2021, the Central Bank of Ireland issued a “Dear CEO” letter which outlined their findings of a review of investment firms’ compliance with the suitability requirements as per MiFID II.
The review identified areas which require more action by firms. These include:
- Firms need to take a more client focused approach.
- Firms must improve their assessment of clients’ knowledge and experience, financial situation, and investment objectives. Particular emphasis should be placed on the client’s capacity to withstand losses.
- Firms must ensure suitability reports are sufficiently detailed and personalised to clients’ objectives and individual circumstances.
- In cases where a client insists on proceeding with the transaction at their own initiative against the firm’s suitability advice - clients should be clearly informed that the firm does not consider the transaction to be suitable, including a clear explanation of the potential risks involved if the client proceeds.
For details of the article covering the letter and a link to the letter please see attached: Central Bank review finds firms providing investment services need to improve suitability assessments
By: Eilish Larkin - Regulatory Consultant