MIFID II product governance rules
On 1 February 2021, the European Securities and Markets Authority (ESMA) has announced that it is launching a common supervisory action (CSA) with national competent authorities (NCAs) on the application of MiFID II product governance rules across the European Union (EU).
The CSA will be conducted during 2021. This action will allow ESMA and the NCAs to assess the progress made by manufacturers and distributors of financial products in the application of these key requirements. The CSA will help in the analysis of:
how manufacturers ensure that financial products’ 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;
how manufacturers and distributors identify and periodically review the target market and distribution strategy of financial products;
and what information is exchanged between manufacturers and distributors and how frequently this is done.