AMF : Information about Financial Investment Advisor status (FIA)

General Regulation

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Marketing Financial investment advisers

Information about Financial Investment Advisor status (FIA)

Published on December 3, 2014

Introduced by Law n° 2003-706 on Financial Security of 1st August 2003, the purpose of Financial Investment Advisor (FIA) status is to enhance investor protection through better supervision of these players in financial product distribution. Each FIA is subject to a certain number of obligations and prohibitions, supervised by the AMF.

Role and missions of financial investment advisors (FIAs)

Until the Law on Financial Security of 1st August 2003, financial investment advice was provided by professionals under a number of different names: asset management advisors, financial advisors, financial experts, etc. To protect investors, the role and missions of the financial investment advisor (FIA) are now governed by the Monetary and Financial Code and the AMF General Regulation.

The regular business of FIAs consists in providing: 

  • Investment advice
    Investment advice is defined as providing personalised recommendations to third parties, either at their request or at the initiative of the company providing the advice, concerning one or several transactions in financial instruments (Art. D. 321-1 of the Monetary and Financial Code).

    investment advice (shares, bonds, shares in SICAVs or units in common funds, derivatives, etc.),
  • advice on investment services (reception-transmission of orders for third parties, order execution for third parties, discretionary portfolio management, etc.), 
  • advice on the execution of transactions in miscellaneous property (subscription of life annuities, etc.).

The FIA may also receive an order from a client who wishes to subscribe to shares or units in collective investment undertakings (for example UCITS or OPCIs) for which it has provided advice services beforehand.

The FIA may prospect clients to propose its financial investment advice. It may also appoint natural persons to carry out such direct marketing on its behalf.

FIA professional requirements

When the FIA is a legal entity
When the FIA is a legal entity, it is the natural persons holding management or administration powers over that legal entity that must fulfil the conditions of age, good repute and professional skill.  

Conditions of age, good repute and professional skill, having insurance and membership of an authorised professional association, etc. All financial investment advisors (FIA) must comply with a certain number of administrative, professional and moral obligations.

Take out a professional indemnity

The FIA must be able to provide proof at any time of the existence of an insurance policy covering it for the financial consequences of its professional civil liability in the event of a breach of its professional obligations. The minimum cover levels of this professional liability policy are set out in Art. D. 541-9 of the Monetary and Financial Code.

Join a professional association

All FIAs must join one, and only one, professional association authorised by the AMF. This association is responsible for collective representation of its members and the defence of their rights and interests. The list of authorised associations may be viewed on the AMF website.

Be registered with the ORIAS

Each FIA must be listed in a register held by the ORIAS, after checking that the FIA fulfils the professional requirements in terms of professional skills, good repute, insurance cover and membership of an FIA association. This register also lists tied agents, banking transaction and payment service intermediaries and insurance intermediaries. It may be viewed by clicking on the following link.This register allows a single registration of financial intermediaries, thus making it possible to identify, for each of them, the various authorisations they have.

Not receive any funds that are not related to the exercise of its FIA functions, nor any financial instruments

The FIA must not receive any funds from its clients other than those intended as remuneration for its financial investment advice service. Nor may it receive financial instruments from its clients.

Pay an annual contribution to the AMF

FIAs must pay the AMF an annual contribution of a fixed sum of €450 for the AMF’s mission in supervising compliance by FIAs with the provisions applicable to them.

FIA business conduct rules

In order to carry out its mission and ensure investor protection, the FIA must comply with good conduct rules.

Duty of support and transparency

The FIA must comply with the following obligations:

  • behave loyally, act fairly and in the best interests of its clients,
  • conduct its activity, within the limits allowed by its status, with the skill, care and diligence required in the best interests of its clients, in order to offer them a service that is adapted and proportionate to their needs and objectives,
  • possess the necessary resources and procedures to conduct its activities and implement such resources efficiently,
  • obtain information from its clients or potential clients, before offering any advice, about their knowledge and experience in investment matters, and their financial situation and investment objectives, in order to recommend operations, instruments and services that are adapted to their situation. When clients or potential clients do not provide the required information, the FIA must refrain from making recommendations to them,
  • inform clients in an appropriate manner of the legal nature and scope of any relations it might have with institutions promoting the products and mentioned in Point 1 of Article L.341-3 of the Monetary and Financial Code (establishments authorised to commission or undertake direct marketing activities), and provide all useful information for the client to make their decision, plus all information concerning their remuneration terms, notably the pricing of their services.

All information sent by an FIA, including promotional information, must be accurate, clear and not misleading.

When the FIA pays or receives a fee, commission or non-monetary benefit to or from a third party relating to the advice service it provides to its client: 

  • the FIA must inform its client to this effect,
  • the purpose of this payment, commission or non-monetary benefit must be to improve the quality of the advice service that is provided and must not be detrimental to compliance with the FIA’s obligation to act in the best interests of the client.

Provide the client with all due information about its activity

The FIA must provide each new client with a document indicating:

Information in correspondence or advertising documents
All correspondence or advertising issued on any medium by an FIA acting in that capacity, must indicate:
>its name or corporate name,
>its professional address or that of its registered office,
>its FIA status and the identity of the professional association it belongs to,
>its ORIAS registration number.

  • its name or corporate name,
  • its professional address or that ot its registered office,
  • its FIA status,
  • its ORIAS registration number,
  • the identity of the professional association it belongs to,
  • its direct marketer status, if applicable,
  • if applicable, the identity of the institution(s) promoting the products and mentioned in Point 1 of Article L.341-3 of the Monetary and Financial Code (investment companies, credit institutions, etc.) and in which it holds a significant stake or commercial interest.


Draft a letter of engagement

Before offering advice, the FIA must submit a letter of engagement to its client, written in duplicate and signed by both parties. This letter of engagement is drafted according to a template prepared by the professional association to which the FIA belongs. It includes notably: 

  • acknowledgement by the client of the existence of the letter,
  • the nature and terms of the service to be provided,
  • the terms on which information will be provided to the client by the FIA,
  • the terms and conditions of the FIA's remuneration.

Formalise its investment proposals

The advice provided to the client is formalised in a written report showing:

  • the different proposals, 
  • Confidentiality of client information
    The FIA must not disclose or make use of information relating to the client outside the scope of its mission, on its own behalf or that of any third party, without the express authorisation of the said client.

    their advantages, 
  • the risks they involve.

These proposals must be based on:

  • an appraisal of the financial situation of the client, 
  • their knowledge of financial matters, 
  • their investment objectives.

Sign an agreement with the producers of financial instruments

The FIA is subject to the rules governing agreements between producers and distributors of financial instruments (Art. L.533-13-1 of the Monetary and Financial Code).

Have adapted resources and procedures

The FIA must implement the technical resources and procedures required for the exercise of its activity.

When it employs several people dedicated to its activity, the FIA must define an organisation and written procedures. It must also implement written internal rules to ensure compliance with regulatory and legislative requirements against money laundering and the financing of terrorism.

The FIA must implement resources and written procedures to avoid, manage and handle conflicts of interest.

Take training courses adapted to their activity and experience

Each year, the FIA must take training courses organised by their professional association to keep their knowledge up to date.

Role and missions of the AMF…

FIAs are subject to two levels of regulation. FIAs join an association which is authorised by the AMF.

… relating to FIAs

The AMF has powers to audit FIAs.

The AMF Enforcement Committee may sanction FIAs in the event of a breach of the rules and obligations applicable to them. The applicable sanctions may include a warning, a reprimand or a temporary or permanent prohibition from providing all or part of their services.

Instead of or in addition to these sanctions, the Enforcement Committee may pronounce a fine of an amount not exceeding €100 million or ten times the amount of any profits that might have been made.

… relating to FIA associations

The AMF is in charge of the authorisation of FIA associations. The list of authorised associations is available on the AMF website.

No later than 31 May of each year, the professional association must provide the AMF with a copy of its balance sheet and income statement for the latest financial year, and of the annual report describing, among other things, for the previous calendar year, audits carried out and their filing, training courses dispensed or selected.

It must also inform the AMF of any changes to the characteristics indicated in its initial authorisation application. The AMF then informs the association of any consequences there might be for its authorisation.

Any modification of the Code of Ethics must be submitted for the prior approval of the AMF.

Since the Law on Banking and Financial Regulation of 22 October 2010, the AMF has had audit and enforcement powers over FIA associations.

The AMF may also withdraw the authorisation of a professional association when: 

  • the association no longer meets the conditions or commitments of its initial authorisation,
  • the association has not made use of its authorisation within the previous twelve months,
  • the association has been inactive for at least three months.

 

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Legal information
Head of publications: Florence Gaubert, Executive Director of AMF Communication Directorate.
Contact: Communication Directorate – Autorité des marches financiers 17 place de la Bourse – 75082 Paris cedex 02