Suitability and appropriateness under MiFID: ‘Faithful watchdogs’ or ‘terrible twins’?

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Investment firms as well as asset and wealth managers are usually seen as the major long-term beneficiaries of the new regulatory regime dictated by the Market in Financial Instruments Directive. End investors also stand to benefit, as MiFID introduces powerful investor protection tools, such as the suitability and the appropriateness assessments. In this ECMI Policy Brief, however, Alessandra Chirico warns that while these assessments may share the same goal of enhancing investor protection, they are subject to two different regimes. And, most importantly, especially when seen from the investment services providers’ standpoint, she emphasises they really need to be kept separate and approached with their clear-cut distinctions borne in mind.