Scope of application
The scope of this new “transversal” regulation is extremely broad, as the concept of “financial products” encompasses (i) savings products (including savings bank accounts and savings life insurance), (ii) investment products (including financial instruments and unit-linked life insurance) and (iii) other insurance products (including non-life insurance and life insurance with no saving/investment component).
Moreover, the concept of retail clients is not limited to consumers but is based on the MiFID definition, meaning that small and medium-sized enterprises are included as well.
When marketing financial products in Belgium (save in the case of private placement or where a prospectus has been published under the Prospectus Directive or where KIID has been set up for an open-ended fund), a Fiche Info will have to be remitted to the retail client prior to any transaction. Such Fiche is intended to describe the key features of the product in order to enable the retail client to understand the nature of the product, the risks associated therewith and, for (life and non-life) insurance products, the cover and the main exclusions.
The format of such Fiche Info is strictly regulated (three pages maximum, minimal font size, non-technical language, tax regime, return simulations…) and templates of standardized Fiche Info have been suggested in the new regulation.
Save for insurance products, the Fiche Info will have to be approved by the Belgian regulator (FSMA) in advance. Designers of insurance products may however spontaneously request approval of their Fiche Info.
Approval (or refusal) is due to be given within 10 business days of receipt of the complete file. In the absence of response, the demand shall be deemed rejected.
In the case of distribution of any advertising material to retail clients (including within a private placement), such material will have to comply with the new regulation. The new rules set forth general principles of fair practices and furthermore impose minimal content requirements (objectives, return, labelling, costs, etc.). Moreover, the mention of any past, simulated or future return and of any award or rating is strictly regulated.
Where a Fiche Info has been submitted for approval (whether on a mandatory or, for insurance products, on a voluntary basis), all advertising material will also have to be approved by the FSMA in advance.
Approval (or refusal) is due to be given within five business days of receipt of the complete file. In the absence of response, the demand shall be deemed rejected.
This new regulation is clearly intended to improve consumers’ protection against thoughtless investments by reinforcing pre-contractual duties and information. The operational and administrative burden on financial products designers and distributors will significantly increase. Insurers, which are already facing huge regulatory challenges with the insurance MiFID regulation and the new law on insurance, will be particularly impacted by this third major regulation in less than one year.