Mystery shopping visits to bank branches: the collection of client sustainability preferences remains fragmented

Since 2010, the AMF has been conducting mystery shopping visit campaigns, both in bank branches and online, in order to monitor financial instrument marketing practices and ensure compliance with the Markets in Financial Instruments Directive (MiFID II), which aims to enhance investor protection. These visits are carried out by a specialist research institute, based on a scenario defined by the AMF. They do not constitute an inspection exercise, but rather a tool for monitoring and improving practices. This latest campaign focussed on getting to know the client and, more specifically, on gathering their preferences in terms of sustainability through the quality of the questions asked, the advice given and the nature of the products proposed.

As part of this campaign, 182 mystery shopping visits were carried out at 12 major retail banks. Two retail investor profiles visited the bank branches: one potentially interested in making a sustainable investment, and one spontaneously expressing their wish to invest sustainably. In both instances, the mystery shopping visitor had financial savings of between 60,000 and 105,000 euros, was looking for investment advice and was prepared to take risks to grow their capital over the next ten years by choosing a sustainable investment.

Conducted at a time when the regulations had just been clarified, this mystery shopping visit campaign had as its main finding that the majority of bank advisers were still ill at ease with collecting sustainability preferences. These were insufficiently collected from and explained to the client:

• sustainability preferences, if expressed by the client, must be accurately and compulsorily collected on three axes: the taxonomy, the European SFDR (Sustainable Finance Disclosure Regulation) and the ‘principal adverse impacts’ defined as negative effects on sustainability factors linked to the investment decisions and advice provided. These preferences were explained at one meeting in two, most often briefly. At fewer than one in meeting five were they ascertained by asking questions about each of these three areas;
• at more than half of the meetings, the mystery shopping visitors felt that the advisers they met lacked clarity and the ability to explain well, and that in two out of three instances they were not sufficiently familiar with the subject of sustainable finance.

In total, of the 182 mystery shopping visits carried out, 72 resulted in a commercial proposal and 22 in a subscription.

As regards the meetings that led to a commercial proposal:

• in almost 70% of cases the advisers focused their proposals on equity funds with an SRI label, without making any real distinction between the two prospect profiles;
• in almost 40% of cases the mystery shoppers felt that the product proposed matched their preferences in terms of sustainability;
• two advisers in three mentioned, usually spontaneously, how the sustainable products worked and their characteristics.

As regards the subscriptions: 

• during more than one visit in ten, the prospect became a client and subscribed to a product;
• in nine cases the adviser encouraged the mystery shopper to make their own investment choice on the Internet from a list of available funds;
• out of the 13 visits with subscription and advice, the suitability report, which is mandatory when the professional has recommended investments, was provided at six meetings.

In addition to collecting information about sustainability preferences, a significant proportion of bank advisers did not ask the mystery shopper about financial aspects in a comprehensive manner in order to establish their profile, even though awareness of the client's situation has been a requirement for several years. For example, two in three advisers asked them about their financial plans and objectives, and one in two asked about their financial experience or knowledge.

The training of bank advisers is a key element in implementing the regulations and improving the quality of the advice provided to clients. It is the responsibility of banking institutions to ensure that their advisers have a good understanding of these issues. In order to support the financial community, the AMF provides, in the framework of professional certification, a module on sustainable finance, which aims to develop a common skill base for advisers and enable them to gather information about their clients' sustainability preferences.

With the aim of improving practices, the AMF has initiated a series of meetings with each of the institutions visited to review the results of this campaign, suggest areas for improvement and discuss any difficulties encountered.

About the AMF
The AMF is an independent public authority responsible for ensuring that savings invested in financial products are protected and that investors are provided with adequate information. The AMF also supervises the orderly operations of markets. Visit our website https://www.amf-france.org/en