Ban on several financial products distributed to retail clients in Belgium

The ban on the distribution concerns the following financial products:

1. Traded lifepolicies (or life settlements), where the return directly or indirectly dependson one or more traded life policies; these are included in all life policies whose benefit is payable upon the death of the insured and that is or will be transferred to a third party for valuable consideration, or the beneficiary rights of which are or will be transferred to a third party for valuable consideration. According to the FSMA, these financial products are highly complex since the setting of the value of these products involves different factors, such as the estimate of life expectancy of the insured, the currencyin which the underlying life insurance contracts are made out and the amount of premium payable so long as the insured is alive, as well as the solvency of insurance undertakings and potential reinsurances. According to the FSMA, all these features do not enable retail clients to estimate correctly the risks associated with these products.

2. Financial products where the return depends directly or indirectly upon virtual money such as‘bitcoin’ money.

3. Investment instruments other than undertakings for collective investment where the return depends directly or indirectly on an undertaking for collective alternative investment which invests in one or more non-mainstream assets.

4. Class 23 insurances, linked to an internal fund which invests directly or indirectly in one or more non-mainstream assets, or the return of which depends directly or indirectly on an alternative fund that invests in one or more non-mainstream assets.

Under non-mainstream assets, the FSMA targets assets such as raw materials, artworks and products such as wine or whisky, which areextremely hard to estimate for a retail client.

The FSMA has justified this ban on the observation that, in aperiod of low interest rates, these financial products are frequently featuredas products that offer certain comfort and return although no correlation exists with traditional markets. As a result, these products are (according tothe FSMA) highly risky, with limited liquidity and too complex for consumers.

Although this ban on the distribution of specific financial products constitutes a restrictive measure on the free movement of capital andthe freedom to provide financial services, the FSMA has justified this regulation on the grounds of overriding public interest.

Finally, it is to be noted that this ban on the distribution of financial products applies only tothe above-mentioned financial products and does not undermine any other arrangement between the FSMA and financial institutions in Belgium, such as the moratorium on the distribution of particularly complex structured products,which is still applicable in parallel.