MiFID II - CSSF Circular 17/665 implementing ESMA Guidelines on the assessment of knowledge and competence
10 August 2017
Regulatory News Alert
On 3 August 2017, the Commission de Surveillance du Secteur Financier (CSSF) published Circular 17/665 aiming to implement ESMA’s guidelines on the assessment of knowledge and competence of 22 March 2016.
The CSSF clarifies the objectives of the assessment of knowledge and competence as stated under Article 25.1 of Directive 2014/65/EU (MiFID II):
“Ensure and demonstrate to competent authorities on request that natural persons giving investment advice or information about financial instruments, investment services or ancillary services to clients on behalf of the investment firm possess the necessary knowledge and competence to fulfil their obligations.”
1. The CSSF defines three areas for the application of the ESMA guidelines to assess the knowledge and competence of financial advisers:
- Criteria for the assessment of the staff providing information on investment services or products or ancillary services (e.g., understanding of the products, the risk associated, total costs, suitability, impact of external factors on the financial markets)
- Criteria for the assessment of the staff providing investment advice (e.g., understanding of the products, the risk associated, total costs, suitability, impact of external factors on the financial markets)
- Organizational requirements (e.g., ensure the assessment of their staff on a yearly basis; submit the documentation related to the assessment to the supervisor upon request).
The CSSF circular requires employees providing information or advice on investment services or products to have sufficient knowledge and competence before being able to provide these services.
2. Following ESMA guidelines, the CSSF provides that:
- The maximum period during which an employee, without the qualification or experience required by the circular, is authorized to work under supervision is fixed at four years.
- The period required for obtaining an appropriate experience is fixed at a minimum of one-year full-time job experience.
3. The verification of knowledge and minimum competence can be done through either:
- An internal evaluation, by all means at the professional's disposal, in line with an internal formal procedure which the CSSF can verify a posteriori, or
- An external professional training certified by the CSSF.
The circular will be applicable from 3 January 2018 along the dispositions of MIFID II (Directive 2014/65/EU on markets in financial instruments) and MIFIR (the Regulation 600/2014/EU).
How can Deloitte help?
Deloitte has developed a host of MIFID II training programs that can be tailored to your needs and help you meet CSSF requirements, from online training at your desk (Deloitte D.Learn) to on-site personalized sessions.
Deloitte actively monitors MiFID II developments and subsequent publications on an ongoing basis. We analyze all relevant published documents in order to identify any changes and to provide the most updated view to our clients.
We offer to organize an informal workshop in your offices to answer your questions, and discuss the latest regulatory updates as well as potential operational impacts and remediation scenarios for your firm.
Please do not hesitate to contact the Deloitte MIFID II task force to prepare a workshop tailored to your requirements.