What is a financial investment adviser?
What criteria must be met to be a financial investment adviser?
What are the obligations for FIAs?
Prohibitions
Professional associations
Registration with the ORIAS
Inspections and enforcement
What happens when FIAs appoint direct marketers to market their advisory services?
AMF position: Q&A on the regime for financial investment advisers (in French)

• What is a financial investment adviser?

An FIA is a person whose regular business consists in advising on:

• investments, as referred to in point 5 of Article L.321-1 of the Monetary and Financial Code;
• provision of the investment services described in Article L.321-1 of the Monetary and Financial Code;
• execution of transactions in "miscellaneous property" described in Article L.550-1 of the Monetary and Financial Code

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• What criteria must be met to be a financial investment adviser?

  Age and reputation

Pursuant to Article D.541-8 of the Monetary and Financial Code, natural persons who are FIAs and natural persons empowered to manage or administer legal entities authorised to act as FIAs must:

• be of majority age;
• not have been the subject of:
  • a temporary or permanent ban on carrying on a business or providing a service following a disciplinary ruling by the AMF (or previously by the COB or CMF);
  • the temporary suspension or compulsory resignation (with or without the appointment of a provisional administrator) of one or more persons in charge of the effective management of the activity of a credit institution.

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Professional competence requirements

These requirements are set out in Article 325-1 of the AMF General Regulation. Before commencing business, an FIA must show that he has:

• a national first-level degree in legal or economic studies, or another degree or credential of the same level;
• relevant professional training in:
  • carrying out transactions in financial instruments, such as equities, bonds, fund shares/units and forward financial instruments (described in Article L.211-1 of the Monetary and Financial Code);
  • providing investment services, such as order reception/transmission, trading on behalf of third parties and portfolio management (described in Articles L.321-1 and L.321-2 of the Monetary and Financial Code);
  • transactions involving miscellaneous property, such as the subscription of life annuities (described in Article L.550-1 of the Monetary and Financial Code).
• at least two years' professional experience in positions related to the conduct of transactions in the categories specified above, gained during the five years before commencing business.

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• What are the obligations for FIAs?

Be insured

An FIA must be able to prove, at any time, that he has an insurance policy covering him against the financial consequences of his professional civil liability in the event of a breach of his professional obligations (Article L.541-3 of the Monetary and Financial Code).

The minimum coverage requirements for such insurance policies are as follows (Article D.541-9 of the Monetary and Financial Code):

• €150,000 per claim and €150,000 per year of insurance for natural persons and legal entitites employing fewer than two people providing FIA services;
• €300,000 per claim and €600,000 per year of insurance for legal entities employing two or more people providing FIA services.

These requirements do not apply to FIAs whose sole activity is the provision of advice to undertakings on capital structure, industrial strategy and related questions and advice and services relating to mergers and the purchase of undertakings.

Belong to a professional association

All FIAs must belong to a professional association authorised by the AMF to represent and defend the rights and interests of member FIAs (Article L.541-4 of the Monetary and Financial Code). The list of authorised associations is posted on the AMF website in the GECO database, under the FIA tab (French only).

Registration with the ORIAS (French organisation responsible for the sole register of financial intermediaries).

All financial investment advisers must be registered on the sole register referred to in Article L. 546-1 of the French Monetary and Financial Code. The professional association to which the financial investment adviser belongs may complete the registration formalities.

Comply with conduct of business rules

These rules are set out in the AMF General Regulation (Articles 325-3 to 325-9):

• Before establishing a relationship with a new client, the FIA must give the client a document containing information about (Article 325-3 of the AMF General Regulation):
  • his FIA status and the registration number assigned to him by the ORIAS;
  • the name of the professional association to which he belongs;
  • where applicable, whether he acts as a direct marketer;
  • where applicable, the name(s) of any institutions(s) promoting products mentioned in point 1° of Article L.341-3 of the Monetary and Financial Code (institutions permitted to commission or undertake direct marketing activities and in which the FIA has a material ownership or commercial interest).

• Before offering advice, the FIA must submit a letter of engagement to the client (Article 325-4 of the AMF General Regulation), to be drawn up in duplicate and signed by both parties. The letter of engagement must be drawn up in accordance with a standard agreement drafted by the association to which the FIA belongs and must contain, inter alia, the following indications:
  • acknowledgment by the client that he has received and read the document mentioned above;
  • the nature of and arrangements for the service to be provided;
  • the means by which information is to be given to the client;
  • the terms and conditions of the FIA's remuneration.

• Advice to the client must be formalised in a written report giving reasons for the adviser's proposals and stating the attendant advantages and risks. The adviser's proposals must be predicated on an assessment of the client's financial situation, experience in financial matters and investment objectives (Article 325-9 of the AMF General Regulation).
• The FIA must have resources and written procedures to enable him to prevent, manage and deal with any conflicts of interest.
• Except with the express agreement of the client, the FIA must refrain from disclosing and using for his own benefit or the benefit of another, outside the scope of his engagement, any information relating to his client (Articles 325-9 of the AMF General Regulation).
• The FIA must have resources and procedures appropriate to the conduct of his business (Article 325-10 of the AMF General Regulation).
• Where an FIA employs several persons to conduct his business, he must adopt an organisational structure and wirtten procedures (Article 325-11 of the AMF General Regulation). The FIA must also establish written internal rules to ensure compliance with regulatory and legal requirements relating to the prevention of money laundering (Article 325-12 of the AMF General Regulation).

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• Prohibitions

In the last ten years, the FIA must not have been sentenced for one of the offences listed in Articles L.500-1 of the Monetary and Financial Code, which include crime, fraud, breach of trust, possession or handling of stolen goods, money laundering, bribery or acceptance of bribes, influence peddling, misappropriation and fraudulent conversion of property, forgery and falsification of securities, participation in an association of criminals, drug trafficking, procuring, bankruptcy, and making loans at usurious rates of interest (Articles L.541-7 of the Monetary and Financial Code).

The FIA must not have been the subject of a temporary or permanent ban on exercising an activity or providing a service following a disciplinary ruling by the AMF or, previously, by the COB or CMF (Article D.541-8 of the Monetary and Financial Code).

Financial investment advisors are prohibited from receiving funds from their customers other than those intended to remunerate them for their FIA-related activities (Article L.541-6 of the Monetary and Financial Code).

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• Professional associations

All FIAs must belong to a professional association authorised by the AMF to represent and defend the rights and interests of member FIAs (Article L.541-4 of the Monetary and Financial Code). The list of authorised associations is posted on the AMF website in the GECO database, under the FIA tab (French only).

A FIA must belong to only one AMF-authorised association (Article 325-2 of the AMF General Regulation).

Authorisation of associations by the AMF

• Authorisation requirements

Before applying for AMF authorisation, the association must meet a number of criteria set out in the AMF General Regulation:

• It must have its registered office in France, and its principal purpose must be to represent and defend the rights and interests of FIAs (Article 325-14 of the AMF General Regulation);
• its legal representatives must meet the fitness, properness and experience criteria relevant to their functions (Article 325-15 of the AMF General Regulation);
• it must draw up a code of conduct setting forth the rules that all FIAs must follow. This code must be submitted for the AMF's approval (Article 325-16 of the AMF General Regulation);
• it must establish written admission and disciplinary procedures for its FIA member. The association must also establish written procedures to monitor members' compliance with applicable laws, regulations and ethical rules (Article 324-7 of the AMF General Regulation);
• it must have the staff and technical resources needed to carry out its mission, including IT facilities enabling it to update the list of financial investment advisers making up its membership and transmit this list to the AMF and to store documents and inspection reports for five years (Article 325-18 of the AMF General Regulation);
• it must ensure that its members' knowledge is kept current by selecting or organising training programmes (Article 325-19 or the AMF General Regulation);
• it must be independent of institutions promoting products mentioned in point 1° of Article L.341-3 of the Monetary and Financial Code, i.e. institutions permitted to commission or undertake direct marketing activities.
• Procedure for authorising associations

The association must file an application with the AMF containing the following (Article 325-21 of the AMF General Regulation

• the articles of the association;
• the name, curriculum vitae and an extract from the judicial record (casier judiciaire) or equivalent document for each of the association' legal representatives;
• a three-year projected budget for the association;
• a draft code of conduct;
• the standard letter of engagement for use by members of the association;
• a description of the human and technical resources that will enable the association to meet the abovementioned obligations.

In deciding whether to issue authorisation to an association, the AMF will review the application to assess whether the applicant, based on its filing, fulfils the requisite conditions.

The AMF may ask the applicant to provide any further information it considers necessary to reach its decision.

• Reporting to the AMF (Articles 325-23 to 325-25 of the AMF General Regulation)

Within six months of the end of the financial year, the association must send the AMF copies of its balance sheet, income statement and activity report for the year, describing, inter alia, the verifications it carried out and the records thereof, and the training programmes that it provided or selected.

The association must inform the AMF of any changes in key items in the initial authorisation application.

The AMF will inform the association of any consequences that such changes may have on the authorisation.

Any modifications to the code of conduct must be submitted to the AMF for prior approval.

• Revocation or authorisation

  The AMF may revoke the authorisation of an association if (Article 325-28 of the AMF General Regulation):

  • the association no longer meets the conditions of its initial authorisation, or if it fails to meet commitments undertaken at such time;
  • the assocation has not made use of its authorisation within the past twelve months;
  • the association has been inactive for at least three months.

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• Registration with the ORIAS

All financial investment advisers must be registered on the sole register referred to in Article L. 546-1 of the French Monetary and Financial Code. The professional association to which the financial investment adviser belongs may complete the registration formalities.

To register, the financial investment adviser shall provide the ORIAS with the following:

• if the applicant is a natural person: his or her name, business address or, if there is no business address, personal address, and, where appropriate, the sign and trade name; a copy of his or her identity card or passport or an extract from his/her birth certificate may be requested;
• if the applicant is a legal entity: a) the names of the persons who direct and manage it, specifying the person among them whose name will be published in the sole register ; b) the address of the headquarters; c) the business name and, where appropriate, the acronym, sign or business name;
• the legal form, SIREN number (French business reference number) and, if the entity is registered in the trade and companies register, a copy of the registration certificate (not more than three months old);
• certification of membership in an association authorised by the AMF;
• proof of liability insurance coverage as set forth in Article L. 541-3 of the Monetary and Financial Code;
• document(s) certifying that the professional qualifications as defined in Article L. 541-1 of the French Monetary and Financial Code have been met; and,
• payment of registration fees.

After the financial investment adviser has registered, the following will be available in the sole register of financial intermediaries of the ORIAS:

• the financial investment adviser’s registration number;
• for a natural person: his or her name, business address or, if there is no business address, personal address, legal form and, where appropriate, the sign, business name and SIREN number;
• for a legal entity: the name of one of the persons who directs and manages it, the address of the headquarters, legal form, business name and, where appropriate, the acronym, sign, business name and SIREN number;
• category of activity to which the entity belongs;
• name of the appropriate regulatory authority; and,
• name and contact information of the professional association authorized by the AMF and to which it belongs.

Decree of 1 March 2012 regarding the single register referred to in Article L. 512-1 of the French Insurance Code and in Article L. 546-1 of the French Monetary and Financial Code

ORIAS press release – Opening of the single register for insurance, banking and financial intermediaries, 15 January 2013  

• Inspections and enforcement

The AMF has the power to inspect associations and FIAs. These inpections may be carried out at any time, either at the AMF's own initiative or in response to a complaint.

The AMF is also empowered to discipline FIAs that fail to comply with the rules and obligations applicable to them.

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What happens when FIAs appoint direct marketers to market their advisory services?

FIAs may ask direct marketers of banking and financial services to market their advisory services. FIAs may ask only natural persons to conduct such marketing for them. In this situation, the professional association of the FIA that apppointed the direct marketer must record the marketer in the registry of direct marketers of banking and financial services.

For more information:

• ORIAS site
• Monetary and Financial Code
• AMF General Regulation, Book III - Service Providers
• Access to the list of authorised professional associations
• FIAs and Direct Marketers > Direct marketers (cold callers)

 

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Updated: 25 February 2013