Reference is made to the consultation document regarding the "Proposed Conduct of Business Rules for the Enhanced Protection of Customers in Investment Services" ( Ref.03/2014) which was issued by the MFSA for consultation on 27th January 2014. In the meantime, as from 1st January 2015, Dr. Michelle Mizzi Buontempo was appointed as director of Conduct Supervisory Unit. This newly set up Unit has been tasked with the setting up and the implementation of the regulatory framework, aimed at securing appropriate consumer protection in financial services through a supervisory regime seeking to address potential or emerging risks for financial services consumers. The Unit shall also endeavour to strengthen the responsibilities of regulated persons in treating customers fairly. To achieve this end, a Conduct of Business Rulebook is currently being drafted setting out the regulatory requirements of regulated persons insofar as their conduct vis-à-vis their clients, is concerned.
The proposed Conduct of Business Rulebook will deal with a number of matters, namely the following:
1. Client Disclosures and Reporting
2. Product Governance
3. Conflicts of Interest
4. Selling Process and Practices
5. Contractual Agreement with Retail Clients
6. Execution of clients' orders
7. Governance of Regulated persons
The consultation procedure in relation to the proposed Conduct of Business Rulebook will take place over two phases. In the first week of May, the MFSA will enter into the first phase of this consultation procedure as it will be issuing a consultation document dealing with the first three topics: (1) Client Disclosures and Reporting; (2) Product Governance; and (3) Conflicts of In-terest. This consultation document will be aimed at obtaining the industry's views on the regulatory approaches which the MFSA is proposing to adopt in relation to specific areas as well as any comments or feedback in relation to the above-mentioned three topics. The second consultation document addressing the remaining topics, will also eventually be issued by the MFSA.
It should be noted that the Rulebook will be addressed to persons licensed under the Investment Services Act (excluding custodians) and to persons carrying on insurance activities in terms of the Insurance Business Act or the Insurance Intermediaries Act (insurance undertakings and insurance intermediaries), and individuals who work with or advise such entities, as well as persons licensed as credit institutions under the Banking which sell or advise clients in relation to structured deposits, where applicable. Furthermore, following the issuance of this consultation document, the MFSA also intends to organise workshops for industry players in order to provide further guidance and clarifications as may be required. Industry players are strongly encouraged to follow this consultation procedure and provide their feedback within the stipulated timeframes.
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.
