Common Supervisory Action on Product Governance Rules

The Conduct Supervision Function within the Malta Financial Services Authority is currently conducting a number of focused on-site inspections at investment firms to assess the application of product governance rules adopted by the selected firms. The target audience is the investment firms and credit institutions when providing investment services activities.

These inspections are being carried out across the EU as part of the European Securities and Markets Authority (“ESMA”) Common Supervisory Action (CSA) with national competent authorities and are focused on the application of MiFID II Product Governance Rules. The purpose of this CSA is to help ESMA and national competent authorities to assess the progress made by manufacturers and distributors of financial products in the application of key requirements including:

  1. how manufacturers ensure that financial product’s costs and charges are compatible with the needs, objectives and characteristics of their target market and do not undermine the financial instrument’s return expectations;
  2. how manufacturers and distributors identify and periodically review the target market and distribution strategy of financial products; and
  3. what information is exchanged between manufacturers and distributors and how frequently this is done.

Do not hesitate to contact us should you require any assistance in relation to the implementation of the applicable rules on Product Governance.