The International Organization of Securities Commissions (IOSCO), an international policy forum whose membership regulates more than 95% of the world's securities markets in 115 jurisdictions, has published a report titled ‘Suitability Requirements with Respect to the Distribution of Complex Financial Products,’ which sets out principles relating to the distribution by intermediaries of complex financial products to retail and non-retail customers.
The report introduces principles that cover the following areas related to the distribution of complex financial products by intermediaries:
- Classification of customers;
- General duties irrespective of customer classification;
- Disclosure requirements;
- Protection of customers for non-advisory services;
- Suitability protections for advisory services (including portfolio management);
- Compliance function and internal suitability policies and procedures;
- Incentives; and
‘These principles provide guidance for IOSCO members and reflect the current regulatory state of play and leading practice in the distribution of complex financial instruments by intermediaries among IOSCO's members,’ says Stephen Po, chairman of the IOSCO Committee on Market Intermediaries. ‘IOSCO is aware that this is an area undergoing constant change and innovation. It will continue to monitor closely future market and regulatory developments which may lead to further policy work in the future.’
The full report is now available online.