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12 - On the Sustainability of the MiFID II and IDD Investor Protection Frameworks

from Part III - Integrating Sustainability in Financial Markets Regulation

Published online by Cambridge University Press:  30 January 2025

By
Veerle Colaert
Edited by
Kern Alexander ,
Matteo Gargantini  and
Michele Siri
Kern Alexander
Affiliation:
University of Zurich
Matteo Gargantini
Affiliation:
University of Genoa
Michele Siri
Affiliation:
University of Genoa
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Summary

The chapter assesses the extent of integration of sustainable finance into the MiFID II and the IDD investor protection frameworks. The chapter explains why retail investors do not always act upon their investment preferences and the role of the investment product distributor in remedying investors’ value-action gap. The chapter discusses the main changes to the MiFID II and IDD frameworks by analysing the new sustainability-related definitions, the amended product suitability assessment, the amended product governance process, and the amended conflicts of interest procedure. The analysis argues that full cross-sectional consistency will not be achieved in the EU investor protection framework as only the MiFID II and IDD frameworks have been amended while rules covering other product distributors remain the same. It also highlights the problems of inconsistency caused by sustainable finance amendments to existing legislation, including when it comes to applying the definition of sustainability preferences, which refer to concepts of the Taxonomy Regulation and the Sustainable Finance Disclosure Regulation, and the lack of a complete Taxonomy covering social and governance perspectives in the amended MiFID II and IDD obligations.

Keywords

investment product distributordisclosure obligationssustainability preferencessuitability assessmentequivalence checkmis-sellinggreenwashingproduct governance
Type
Chapter
Information
The Cambridge Handbook of EU Sustainable Finance
Regulation, Supervision and Governance
 , pp. 317 - 356
Publisher: Cambridge University Press
Print publication year: 2025

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References

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