The AMF publishes a working group study on structured products
The AMF has published the findings of a working group comprised of members of its Retail Investor, Asset Management and Institutional Investors, and Markets and Exchanges Consultative Commissions on good practices for making the structured products distributed to retail investors in France clearer and easier to understand.
Background
When marketing structured debt securities, and in application of the obligations arising from the MiFID II Directive and the PRIIPs Regulation, a distributor must, in particular, provide clear, accurate and non-misleading information to investors and the product's key information document (KID).
The AMF set up a working group to assess information quality and clarity in relation to the marketing of structured debt securities to the general public, with the exception of life insurance, and particularly with regard to the risks associated with the complexity of the products.
This working group, chaired by the Chairs of the Retail Investor, the Asset Management and Institutional Investors, and the Markets and Exchanges Consultative Commissions, was made up of several members from each of these Commissions.
This study does not constitute AMF doctrine and does not amend the AMF's guide to preparing promotional marketing materials for structured debt securities. It does feed into the AMF's thinking on the distribution of these products, in the context of the work being done by the Joint Unit (AMF and ACPR) on structured products and the work of the Observatoire des Produits d'Epargne Financière (OPEF), set up under the Comité Consultatif du Secteur Financier (CCSF).
In support of clear, accurate and non-misleading information
The working group, which examined marketing brochures, sets out good practices, in particular as regards:
- The questions retail investors ask themselves in order to understand a product;
- The use of the term "underlying assets" and simulations of the performance of underlying indices;
- Clarifications on the use of the decrement mechanism;
- The presentation of distribution fees.
The working group further proposes that industry groups compile a glossary of the technical terms used in marketing brochures in order to make these more comprehensible to the general public.
In support of informed advice for the general public
The working group's study also contains useful reminders and guidelines for the marketing of structured products, particularly with regard to product governance and checking suitability when providing the service of investment advice, and suggests areas in which distributors can be trained.
