The FSMA circular of 27 October 2015 primarily relates to the "transversal" royal decree of 25 April 2014 imposing certain information obligations when marketing financial products to retail clients ("transversal RD"). This royal decree, as amended by the royal decree of 2 June 2015, contains only general provisions on advertising in relation to the offering of financial or insurance products. The circular comments on this decree and on the other applicable advertising rules.
Entry into force suspended due to PRIIPs regulation
Essentially, the circular is about the remaining part of the transversal RD which, in Belgium, was intended to anticipate the European Regulation of 26 November 2014 on key information documents for packaged retail and insurance-based investment products ("PRIIPs").
The Royal Decree of 2 June 2015 (Official Gazette 10 June 2015) "postponed" the entry into force of those provisions of the transversal RD which were substantially aligned with the purpose of PRIIPs, i.e. those provisions relating to the requirement to produce a fact sheet for the offering of financial products (e.g. Title II), the requirement to indicate a risk label (section 12, 1, 4° c) and 14 of Title III) and the performance scenarios (section 4, §5), as well as the presentation of the simulated future returns (section 22, e)).
The transversal RD, as amended, however, maintains the requirement to produce a fact sheet for the offering of regulated savings accounts to retail clients.
The remainder of the transversal RD entered into force on 12 June 2015, as planned. However, marketing materials distributed before 12 June 2015 are only required to be adapted as of 1 January 2016.
Scope of the transversal RD
The provisions of the transversal RD apply to any marketing material relating to financial products distributed to retail clients (as opposed to professional clients within the meaning of the "MiFID" Royal Decree of 3 June 2007), when such documents are distributed by "the manufacturer, regulated distributor or regulated intermediary, provided that they are able to issue, assign or open the concerned financial products, or by a person acting on his behalf" (section 9). Oral communication for marketing purposes also falls within the scope.
The transversal RD applies regardless of whether the offer is considered as private or public, but excludes from its scope offers of financial products that require an initial investment of EUR 100,000 (or EUR 250,000 for the units of UCITS). The transversal RD does not apply to already issued financial products which are marketed within the framework of a service consisting of receiving and transmitting orders, where the provider of this service does not receive any remuneration other than the remuneration received for receiving, transmitting or executing orders (as applicable). Finally, the transversal RD also excludes contracts relating to the "first and second pillars" of pension and insurance products relating to the coverage of major risks.
What innovations are introduced by the transversal RD and the FSMA circular?
The transversal RD aims at bringing together all the (mainly existing) rules on advertising into a single regulatory instrument, and applying them, in a "transversal" manner, to all types of savings, insurance and investment products distributed professionally to retail customers.
The provisions of Title III of the transversal RD restate and complement the existing requirements in other financial regulations, particularly MiFID regulations (e.g. advertising of historical, simulated and future returns) and the Economic Law Code (e.g. prohibition on misleading advertising) that are applicable to commercial activities with consumers.
Marketing materials relating to investment instruments, units of UCIs within the framework of a public offer and regulated savings accounts are subject to prior approval by the FSMA, which is not a significant innovation.
The transversal RD does not create any major changes. The FSMA's long accompanying circular requires professionals to pay closer attention.