Print from the website of the AMF
Published on July 24, 2018
Introduced by the Law of 1st of 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. Following the entry into force of MIF2, the regime now includes a number of rules similar to those applying to investment service providers.
Until the Law on Financial Security of the 1st of 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 or one or more of the units mentioned at Article L.229-7 of the Environment Code (Art. D. 321-1 of the Monetary and Financial Code).
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.
The AMF has specified the extent to which, and under what terms, what is generally known as "corporate finance advice" comes under number 3 of article L. 321-2 of the Monetary and Financial Code and may be undertaken without approval or any particular professional status. The DOC-2018-03 position paper produced together with ACPR clarifies the demarcations between corporate finance advice, which is not regulated, and non-guaranteed investment and investment advice services, which can only be provided by regulated professionals.
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.
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.
All FIAs must join one, and only one, professional association authorised by the AMF. This association monitors its members' professional work at the individual level and is responsible for their rights and interests at the collective level. The list of authorised associations may be viewed on the AMF website. When considering new FIA applications, the association checks that the applicant has a programme of activity and assesses the quality of that programme (article L.514-4 of the Monetary and Financial Code).
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. The Financial intermediaries register (ORIAS). This register allows a single registration of financial intermediaries, thus making it possible to identify, for each of them, the various authorisations they have.
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.
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.
In order to carry out its mission and ensure investor protection, the FIA must comply with the organisation and good conduct rules set out in articles L.541-8 and L.541-8-1 and detailed in articles 325-3 et seq. of the AMF General Regulation
The FIA must in particular comply with the following obligations:
All information sent by an FIA, including promotional information, must be accurate, clear and not misleading.
Unless it informs the client that the advice is being provided on an independent basis, 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 AMF has published a guide for FIAs that presents the new analogue FIA regime that has come into force in France following the implementation of MIF 2 by illustrating its various impacts on FIA business.
FIAs must tell their clients whether the advice being provided is independent. Where advice is provided on an independent basis, the FIA:
FIAs may not permit the natural persons they employ to provide both independent and non-independent advice.
FIAs must:
The FIA must provide each new client with a document indicating as follows:
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.
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 may be drafted according to a template prepared by the professional association to which the FIA belongs. It will include the following in particular:
The advice provided to the client is formalised in a written declaration of suitability showing:
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.
These proposals must be based on:
The document must explain why the recommendation is suitable for the client and how it meets the client's own aims and needs concerning investment term, the client's knowledge and experience and the client's appetite for risk and its ability to absorb loss.
The FIA must have the resources and procedures needed to undertake its business properly and must use those resources and procedures efficiently.
When it employs several people dedicated to its activity, the FIA must have the organisation and written procedures needed to ensure that its business meets all legal and ethical requirements..
It must also:
Each year, the FIA must take training courses organised by their professional association to keep their knowledge up to date.
FIAs are subject to two levels of regulation. FIAs are members of an association authorised by the AMF.
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.
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.
The AMF has audit and enforcement powers over FIA associations.
The AMF may also withdraw the authorisation of a professional association when:
Legal information
Head of publications: The Executive Director of AMF Communication Directorate.
Contact: Communication Directorate – Autorité des marches financiers 17 place de la Bourse – 75082 Paris cedex 02