CONSOB issues guidelines for insurers on “complex products” in Italy

This alert briefly illustrates the issues of major interest for the insurance sector related to the Guidelines on complex products published by CONSOB on 23 June 2015.

On 23 June 2015, CONSOB (the Italian Stock Exchange Commission) published a set of long awaited guidelines containing clarifications on the scope of application of its communication no. 0097996 of 22 December 2014 on the so called “complex products” (the Communication).


The Communication was released by CONSOB based on the two ESMA Opinions released on 07 February and 27 March last year on, respectively, “MiFID practices for firms selling complex products” and on “Structured retail products - Good practices for product governance arrangements”.

A list of presumed complex products has been published by CONSOB, including, among others, classes III and V of life insurance business.

ANIA (the insurance category association) had requested clarification on the scope of application of the Communication to unit and index linked products, in a seminar held last April by CONSOB, whose outcomes had been published by the insurance category association. In that seminar, taking into account the numerous requests of clarifications submitted by the operators, CONSOB had undertaken to release further operational guidelines before the 30 June 2015 deadline by which the impacted operators should have started taken measures to implement the content of the Communication.

With the release of these guidelines, apparently most of the uncertainties surrounding the application of the Communication, the subjects impacted and the products falling within the scope of application of the Communication should have been cleared.

However, with respect to the summary provided by ANIA on the outcomes of the above mentioned seminar, some grey areas still remain.

Below is a recap of the issues of major interest for the insurance sector.

Insurance sector - the topics covered by the Guidelines of interest to the operators

Retail clients v professional clients

CONSOB clarifies that the Communication applies to retail clients - as per the MiFID definition - as well as to professional clients.

Distribution of life insurance products with financial contents

CONSOB Communication applies when the intermediary (as defined in the Communication) under its own responsibility, and with the due diligence, assesses that the product it distributes has the characteristics indicated by CONSOB under points vii, xi, xii of the list contained in CONSOB Communication.

Unit linked policies allowing access to alternative funds must be considered among complex products.

Compliance with the Communication - deadline

CONSOB clarifies that the Communication applies to all products which are to be considered complex issued or commercialised after 30 June 2015.

Communication to the client that the product may not be adequate as being a complex product sold to a retail client

Information to retail clients that the product may be considered inadequate being a complex product must be provided simultaneously with the assessment of the adequacy of the product.

Inducement and distribution by employees

Inducements should be avoided as they may prejudice the compliance by the intermediary of the duty of better serving the client’s interests. Complex products do not divert from the principle.

Distribution of products which are not adequate to retail clients shall not provide for inducements for the employees distributing complex products.

What if the product is categorised as complex under more than one item in the CONSOB list

If a product falls within more than one of the categories indicated by CONSOB as “complex” products, it will have to be considered as falling under the strictest regime applicable to the “most complex” product.

What is a product with a leverage bigger than one

“Leveraged” products are - based on the clarifications provided - those products which trigger an exposure to the investment risk higher than the capital invested.

In this respect, therefore, leveraged UCITS are those UCITS which are linked to leveraged benchmarks in order to achieve a coverage of the exposure or an efficient management of the portfolio which does not alter the investment risk/performance of the fund.

Index linked products

The query posed had in mind index linked products whose indexes had been compliant with IVASS Regulation no. 32/2009, asking specifically if such products had to be considered “complex”.

The Italian Stock Exchange Authority clarified that distributors of index linked products linked to indexes compliant with the above mentioned IVASS Regulation must assess the complexity of the products in question under their own responsibility in order to verify that not only Regulation no. 32 is complied with but also ESMA Opinions on ETF products, from which the definition of complex products stems.

Compliance by 30 June 2015

CONSOB clarifies that the Communication requires that the intermediaries (as defined in the Communication) assume that, by 30 June 2015, specific actions need to be taken to be compliant with ESMA Opinions and the Communication. Of the specific actions, intermediaries shall have to inform CONSOB.

Inconsistencies with the communication released by ANIA further to the seminar

Many doubts remain about today’s guidelines and the previous summary provided by ANIA on the scope of application of the Communication, which we hope will be further clarified.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.