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Investor Protection

Investor Protection

Financial services have a significant impact on investors. It is important that investors make informed decisions and feel confident they are adequately protected if something goes wrong.

MiFID II/MiFIR empowered ESMA to propose Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS). Furthermore, the European Commission requested ESMA to provide technical advice for the adoption of Commission delegated acts.​ A full overview of ESMA RTS and ITS is available in the Guidelines and Technical Standards section. 

ESMA has also used its different tools to issue guidelines, opinions and Q&As on various topics related to investor protection under MiFID II/MiFIR, to promote a consistent and convergent approach, across the EU, to the implementation of the new requirements coming into force on 3 January 2018.

What is ESMA’s role?

ESMA is committed to a high level of harmonised protection for investors by ensuring good conduct from firms that sell or advise consumers to buy financial instruments. ESMA is committed to ensuring that:

  • Firms treat their customers in a fair and transparent way and put customers interests at the centre of their business models and corporate culture;
  • Investors are given clear and relevant information; and
  • Investors are provided with products that match their needs and investment objectives.

The investor protection elements of MiFIR also introduce specific product intervention powers where ESMA and national supervisors are able to temporarily prohibit or restrict the marketing, distribution or sale of a financial instrument or a type of financial activity or practice where certain conditions are met.

Improving organisational requirements

MiFID II introduces obligations on manufacturers regarding how products are created and reviewed, as well as on distributors regarding the market targeted and how to manage potential conflicts of interest.  

Firms should ensure full transparency regarding the context in which investment advice is provided, both in terms of the level of analysis provided and how this advice is paid for.

In addition, MiFID II strenghtens the role and the quality of the management body, introduces additional or enhanced organisational requirements for investment firms in the areas of complaints handling, record keeping, conflicts of interest, risk monitoring and safeguarding of clients’ assets.

Meeting the needs of the investors

The investors should be presented with the appropriate information concerning the advice provided and the financial instruments proposed. The products put forward should match their needs and investment objectives and clear information regarding costs and charges should be available.

During the life of an investment, the client will also receive periodic reporting on costs and charges, in order to be able to make informed investment decisions.