CONSOB launches a public consultation on ESG issues affecting the distribution of IBIPs
On February 17, 2022, the Italian Financial Market Supervisory Authority (“Consob”) launched a public consultation on proposed amendments to Consob Regulation no. 20307 of February 15, 2018 regarding intermediaries (“Consob Intermediary Regulations”), for the purpose of implementing, at national level, the following European sources of sustainable financing:
- Directive (EU) 2021/338 which, as part of the Capital Markets Recovery Package, modifies MiFID II with regard to investor protection;
- EU Regulation 2021/1257 amending, among other things, the delegated acts for the implementation of MiFID II, UCITS and IDD;
- Directive (EU) 2019/2034 amending MiFID II as regards the provision of investment services by non-European companies at the sole initiative of clients,
concerning, inter alia, product governance rules applicable to the provision of investment services, discipline in respect of conflicts of interest and the distribution of insurance-based investment products (IBIP).
With regard to the major changes to be introduced in the distribution discipline of IBIPS in the Consob Intermediate Regulations, these can be summarized as follows:
- product oversight governance (”POG”):
manufacturers are required to:
I. take into account the sustainability of the IBIPs, as well as the sustainability objectives of the clients in the approval process for insurance products, also during the testing and monitoring phase;
ii. consider the sustainability factors of these products, as well as customers’ sustainability goals, when defining the target market;
iii. employ staff with sufficient experience and knowledge to understand the sustainability objectives of customers entering the target market when designing IBIPs;
iv. provide distributors with the necessary information to enable them to identify customers whose objectives, also in terms of sustainability, are not compatible with the insurance product.
- conflict of interest: insurance distributors and insurance companies that are also distributors must also take into account the conflicts of interest that may arise from the customer’s preferences in terms of sustainability;
- investment adequacy assessment:
I. the client’s investment objectives, his ESG preferences must be taken into account in the information acquisition phase;
ii. insurance products that do not meet the customer’s sustainability preferences should not be recommended.
The aforementioned amendments and modifications are only applicable to IBIP distributors subject to the regulations of the Consob. It is not yet clear whether IVASS will do the same for distributors under its supervision.
The public consultation is available (only in Italian) at the following link:
comments to the consultation can be sent to the Consob until March 19, 2022 online, via the SIPE (Integrated External System).