The European financial regulator has published guidelines about how firms cross-sell products, in a bid to handle conflicts of interest and other issues.
The European Securities and Markets Authority (Esma) guidelines on cross-selling fall under the updated Markets in Financial Instruments Directive, or MiFID II, which comes into force in 2017.
According to Esma, the guidelines are there to ensure investors are treated fairly when a firm offers two or more financial products or services as part of a package.
The guidelines include principles on improving disclosures when different products are cross-sold with one another, and require firms to provide investors with clear, relevant information.
Also addressed are conflicts of interest that may arise from remuneration structures, and improving client understanding on whether purchasing the individual products offered in a package is possible.
The guidelines are addressed to national regulators supervising firms that provide MiFID services.
As cross-selling often involves products from more than one financial services sector, it was originally intended that Esma would oversee certain products, while other European Supervisory Authorities (ESAs) – such as the European Bankers Association – would cover others. However, the ESAs decided to issue Esma-only guidelines under MiFID II, in order to meet a January 2016 deadline.
The ESAs will raise the possibility of legislative change with the European Commission to provide a foundation so that future guidelines can apply across financial sectors.
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