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ESBG: MiFID II failed to adapt investor protection to investor category characteristics

ESBG: MiFID II failed to adapt investor protection to investor category characteristics

​​​Association says in ESMA call for evidence that no consideration given to special features, different protection requirements for retail investors, professional clients and eligible counterparties


>> See ESBG response to ESMA call for evidence​​

>> See related policy positions related to MiFID II


BRUSSELS, 9 September 2019 – ESBG says MiFID II actually failed to adapt investor protection to the characteristics of each investor category – retail investors, professional clients and eligible counterparties. Replying late last Friday to an ESMA call for evidence on the impact of the inducements and costs and charges disclosure requirements under MiFID II, ESBG opined that the same disclosure obligations with regard areas such as costs and inducements apply to all three investor categories. It adds that “no consideration was given here to the special features or different protection requirements."

For the requirements related to professional clients and eligible counterparties, ESBG argues that these are superfluous because wholesale business partners are on the same level as financial institutions and know conditions and the prices of various financial service providers.

Different calculation of costs under PRIIPs and under MiFID II is another major problem ESBG highlights, including around treatment of inducements, for instance. “While product costs under the PRIIPs regulation include inducements, the product costs under MiFID II are presented without inducements because they need to be added to the service costs under MiFID II. This means for clients, they receive two different sets of information on product costs for the same financial instrument – if it is both a PRIIP and a financial instrument under MiFID II – even if the information in both cases is based on the same investment amount." ESBG warns that this discrepancy makes it difficult for clients to understand costs involved and has to be explained further to them. Resulting from of contradictory calculation requirements in EU legislation, need exists for better coordination among thematically related legislative projects in future legislative processes. This applies especially to the upcoming reviews of MiFID II and the PRIIPs Regulation along with the work on the various sustainability projects currently underway. The aim should be to use uniformly defined terms in all legislative texts and to take account of possible interaction.


MiFid; Consumer protection; European Supervisory Authorities (EBA-ESMA); European Institutions