ESMA Guidelines on knowledge and competence

Transcription

1 ESMA Guidelines on knowledge and competence Angela Maria Bracci Finance Department ABI EBTN Membership Meeting Rome, 22 January 2016

2 Agenda 1. ESMA Consultation Paper Draft Guidelines for the assessment of knowledge and competence (slides 3-7) 2. ABI remarks to the Consultation Paper (slides 8-10) 3. Final Report ESMA Guidelines for the assessment of knowledge and competence (slides 11-13) 4. Next steps (slide 14) 2

3 Background for ESMA Guidelines According to Article 25(1) of MiFID II Member States shall require investment firms to ensure and demonstrate to competent authorities on request that natural persons giving investment advice or information about financial instruments, investment services or ancillary services to clients on behalf of the investment firm possess the necessary knowledge and competence to fulfil their obligations under Article 24 and this Article. Member States shall publish the criteria to be used for assessing such knowledge and competence. Article 25(9) of MiFID II requires ESMA to develop Guidelines specifying criteria for the assessment of knowledge and competence required under paragraph 1 of Article 25. MiFID II reinforces the principles laid down by MiFID I 3

4 ESMA Consultation Paper on Draft Guidelines On April 23 rd, 2015, ESMA published a consultation paper on Draft guidelines for the assessment of knowledge and competence, aimed at developing the criteria that shall be specified by National Competent Authorities (NCA) in order to detail how investment firms are required to assess the qualification of their staff providing investment and ancillary services to clients. ESMA in its consultation paper proposes to consider knowledge and competence as two different and separate items, based: as far as it regards knowledge, on an appropriate qualification ; as far as it regards competence, on the minimum period of appropriate experience that is required for relevant individuals. 4

5 Knowledge: appropriate qualification According to ESMA Draft Guidelines: the national competent authorities (NCAs) or another national body identified in the Member State should set out the appropriate qualifications that they consider to meet the requirements of these guidelines; as an illustrative example, an NCA might determine that (i) a primary university degree in economics with specific exams focusing on financial markets, (ii) or (ii) other recognised qualifications complemented by identified courses in financial services that capture the requirements of the guidelines, should be considered an appropriate qualification. 5

6 Appropriate experience Even though ESMA Draft Guidelines recognize that the minimum period of appropriate experience can be differentiated depending on the appropriate qualification attained by staff and also depending on the relevant service being provided, they propose: that NCA define the minimum period of appropriate experience at national level; staff with less than the minimum period should be always assisted by a trainer; as a transitional provision, to consider existing relevant staff in firms having, at the date of the application of the guidelines (3 January 2017), not less than five consecutive years of appropriate experience of providing the same relevant services, possess the necessary knowledge and competence to fulfil their obligations under Article 24 and 25 of MiFID II. 6

7 Specif proposals for staff lacking the requirements ESMA Draft Guidelines requires firms to: ensure when a member of staff has not acquired the necessary knowledge and competence in the provision of the relevant services, this staff member cannot provide the relevant services until the staff member acquires appropriate experience and an appropriate qualification; ensure the inexperienced staff member is trained by another member of staff until they are deemed to have gained the appropriate experience. ensure that, during the training period, the person providing the training is present during all client meetings and communications; ensure that responsibility for the provision of the relevant service remains with the person providing the training. 7

8 ABI remarks to the ESMA Consultation Paper General remarks ABI in its reply (July 2015) highlights that the increase in knowledge and competence pursued by MiFID II should consider all the areas already outlined by the existing MiFID L2 concerning the skills, knowledge and expertise necessary. In ABI s opinion, therefore, it would appear consistent with the formulation of MiFID I and II that ESMA Guidelines interpret competence not only as the result of professional experience defined by a period in time, but rather as the result of knowledge, skills, levels of autonomy and responsibility gained as a result of learning processes of a formal and informal nature. 8

9 ABI remarks to the ESMA Consultation Paper/2 ABI disagrees with the provision that stipulates that only those who, at the time of entry into force of MiFID II, have gained no less than five consecutive years' experience in the provision of investment services would be considered in possession of the necessary requirements. This clause, in fact: considers the criterion of competence in a restrictive manner, identifying it only in terms of experience, thereby departing from the previously applicable requirements of MiFID I, L2 regarding the skills and experience ; consequently, it is not suitable to prove the necessary requirements for personnel involved in client relations. ABI therefore highlights that the structure of this clause needs to be reconsidered and entrusted to the NCA in accordance with the national rules on the procedures for implementing the Guidelines. 9

10 ABI remarks to the ESMA Consultation Paper/3 ABI highlights that the Guidelines should: expand the range of accepted certifications regarding level of knowledge qualifications: (i) primary university degree in economics with specific exams focusing on financial markets, or (ii) other recognised qualifications complemented by courses identified in financial services that capture the requirements of the guidelines ; let intermediaries to define the minimum period of tutoring or other methods to verify the achievement of the specified competences and their related maintenance over time, as an alternative to the aforesaid tutoring; acknowledge the authoritativeness and guarantees of the entire system that governs financial advisors in Italy, in providing certification of the adequate knowledge and competence of the parties registered with the special register. 10

11 ESMA Final Guidelines On December 17 th, 2015, ESMA published the Final Report on the Guidelines for the assessment on knowledge and competence. The final Guidelines are very different from the initial draft and state as follows. Hot issues Appropriate experience means that a member of staff has successfully demonstrated the ability to perform the relevant services through previous work. This work must have been performed, on a full time equivalent basis, for a minimum period of 6 months. Beyond this minimum period, the NCA can differentiate the period of experience required, depending on: the appropriate qualification attained by staff and also on the relevant services being provided 11

12 ESMA Final Guidelines/2 Where member of staff has not acquired the appropriate qualification or the appropriate experience to provide the relevant services or both, firms should ensure: this staff member can only provide the relevant services under supervision; the level and intensity of supervision should reflect the relevant qualification and experience of the staff member being supervised and this could include, where appropriate, supervision during clients meeting and other forms of communication such as telephone calls and s; the supervision provided is tailored to the services to be provided by that staff member and cover the requirements of these guidelines relevant to those services. 12

13 ESMA Final Guidelines/3 NCA define: the list of the specific appropriate qualifications that meet the criteria of the guidelines or alternatively the criteria of these guidelines as well as the characteristics that an appropriate qualification needs to meet in order to comply with those criteria; the period of time required to gain appropriate experience; the maximum period of time under which a staff member lacking appropriate qualification or appropriate experience is allowed to work under supervision; whether the review of staff member s appropriate qualification should be carried out by the firm or an external body. 13

14 Next steps The Final Guidelines will be translated into the official EU languages and published on the ESMA website. The publication of the translations will trigger a two-month period during which National Competent Authorities (NCAs) must notify ESMA whether they comply or intend to comply with the guidelines. The Guidelines and the national implementing rules will entry into force together with MiFID II (it is more and more probable that MiFID II will be delayed from 1 January 2017 to 1 January 2018) 14