Focuses on certain aspects of compliance requirements under directive
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BRUSSELS, 25 October 2019 – ESBG recently submitted its response to an ESMA consultation on guidelines on certain aspects of the compliance requirements under MiFID II.
In the response, ESBG argues that no further guidance is needed to clarify the compliance function’s monitoring obligations. In its view, the planned addition – interviews with customers – is not necessary, as compliance is already required to use customer complaints as a source for its activities (see marginal figure Supporting guideline 30). The association adds that such interviews of customers by the compliance function are neither practicable nor target-oriented. Due to the integration of the compliance function within the framework of complaint management, there is no added value from our point of view. Moreover, client interviews do not guarantee a higher level of investor protection. The planned addition of interviews with customers should therefore be avoided.
ESBG opines that guideline 1, which encourages “to take into account the results of any monitoring activities and of any relevant internal or external audit findings”, is an obligation that might be positive if it secures the coordination and integration of all defence lines. It should not compromise, however, the independence between the third and second level of defence. If this happens, it would be preferable to maintain the original wording.
ESBG Members take a critical view of the responsibility of management as provided for in the last sentence of paragraph 48. Such responsibility cannot be provided by way of interpretation, but only at level 1 or, if authorised, at level 2. In addition, responsibility of the executive board for the appropriate staffing of the compliance function and the expertise of the compliance function employees collides with the explicitly standardised responsibility of the compliance officer for the compliance function (see Art. 22 para. 3, letter b) MiFID II Delegated Ordinance). ESBG advocates a waiver of that last sentence.
On general guideline 6 in paragraph 53, the association takes a critical view of the requirement in the last paragraph "high professional ethical standards and personal integrity". These criteria are not relevant under MiFID II. Regulatory requirements require that the compliance function has the necessary expertise (see Article 22 (3) (a) MiFID II-Del.Reg. 2017/565). As the interpretation would itself require interpretation, its verifiable implementation would probably be impossible in practice. We suggest deleting the last sentence in paragraph 53 of the supporting guideline.