Global Trustee and Fiduciary Services Bite-Sized Issue 4 2024

Global Trustee and Fiduciary Services Bite-Sized | Issue 4 | 2024 14 QUICK LINKS AIFMD BENCHMARK REGULATION CBDC COSTS & CHARGES CRYPTOASSETS CYBERSECURITY DIVERSITY & INCLUSION FINTECH IFD/IFR LIBOR TRANSITION MIFID II/MIFIR OPERATIONAL RESILIENCE PRIIPS RETAIL INVESTMENT STRATEGY SETTLEMENT SUSTAINABLE FINANCE/ESG UCITS ASIA LUXEMBOURG NORTH AMERICA UNITED KINGDOM Investment advice in the best interest of clients ECON agreed that financial and insurance advisors should provide more transparent, understandable and tailored advice to their clients based on an appropriate range of financial and insurance-based investment products. Clients should be offered products suitable to their needs, taking into account performance, level of risk, qualitative elements, costs and charges. When providing portfolio management or insurance-based investment products, investment firms, would not be allowed to accept fees, commissions or any monetary or non-monetary benefits paid or provided by any third party in relation to the provision of the service. In case of a third-party research provider, clients would have to be informed on how the total cost of such research affects their fees. Comparable financial products Investors should be able to compare costs of investment products. The cost should be subject to corrective measures where unjustified or not proportionate to the value delivered. To facilitate such comparison, the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA) should, after consulting national competent authorities, develop common European benchmarks for products manufactured and distributed in two or more member states. Products manufactured and distributed in one member state should be subject to national benchmarks. Benchmarks should not lead to price regulation. They would be used as a supervisory tool, to assess the monetary and non-monetary benefits of the products and to identify potential outliers on the market. Better communication New rules also aim at enhancing the quality of financial advice. Financial advisors should be required to follow professional training each year, part of which should be dedicated to sustainability issues. The information to customers should be provided in a standardised manner and comprehensible language. ECON also strongly advise that member states support financial education, establish targets on financial literacy and exchange best practices in order to increase customers’ knowledge. Competent authorities in member states would need to take measures to prevent offering unauthorised investment services, including crypto-assets. As younger clients are likely to be more vulnerable to mis-selling online amplified by influencers or social media, ECONMEPs want to supervise such activities. Where investment firms use services of so-called finfluencers, to promote financial products or contracts, firms should have a written agreement with them, their contact details and control over their activities. Additionally, ECON wants member states to ensure that investment firms establish procedures, including electronic communication channels so that clients’ complaints are dealt with properly, within up to 30 days. Modernisation of KID In a separate vote, ECON also made changes to key information documents for packaged retail and insurance-based investment products (PRIIPs). It wants to ensure comparability between PRIIP products and to develop an independent online comparison tool of the different investment options available in the EUmarket. Next steps The texts, which constitute Parliament’s negotiating mandates, will be tabled for approval during the first plenary session in April. Link to Full Statement here SETTLEMENT Accelerated Settlement Taskforce Report On 28 March 2024, the UK’s Accelerated Settlement Taskforce published its report. The key recommendations are: • That the UK should commit to moving to a T+1 settlement cycle. • That this move should take place no later than 31st December 2027.