On 22 December 2014, CONSOB issued the Communication No. 0097996
(the "22 December Communication") for intermediaries
active in the distribution of complex financial products to retail
investors, with the aim to increase the level of protection in
favour of the "least aware and therefore weakest and most
vulnerable component of the market".
Through the 22 December Communication, CONSOB (i) recommends
intermediaries not to offer to retail investors complex financial
products that have been indicated in a specific list, including,
but not limited to, securitizations, instruments convertible at the
discretion of the issuer, structured and credit-linked instruments;
(ii) reminds intermediaries that they must ascertain coherence
between the products offered and the investors' profile; (iii)
reminds intermediaries to prevent conflicts of interest which may
occur in the distribution of complex financial products to retail
investors and, for such purpose, recommends to remove incentives
that can emphasize the sale of such products in a situation of a
potential conflict of interest; and (iv) invites intermediaries to
use the same assessment and simulation methods that are used for
internal purposes to manage risks also in relation to the
information to be provided to retail investors in the distribution
In the event intermediaries decide to deviate from the
abovementioned recommendations, such decision must be taken, on a
justified basis, by the top management and the intermediary must
inform the client of the fact that CONSOB considers such product
"unsuitable" for retail investors.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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