In a region-wide compliance sweep, European securities regulators are targeting conflicts of interest in investment distribution.
On Tuesday, the European Securities and Markets Authority (ESMA) announced that it will launch a joint compliance review, along with the region’s various national regulators, that examines how investment firms comply with their obligations to deal with conflicts in the distribution of financial instruments.
Among other things, the review — which will take place in 2026 — will examine the impact of industry compensation arrangements, and other inducements, on the products that investors are offered.
The exercise will also look at how online platforms direct investors to certain products, and how clients’ best interests are prioritized in these transactions.
Additionally, the initiative will review how firms manage conflicts between their own profits and investors’ needs.
ESMA said it expects the review, along with collaboration between regulators, will strengthen retail investor protection and will help ensure that the rules in this area are enforced consistently across the region.