Articles

Royal Decree concerning certain information requirements for the offering of financial products to non-professional clients

Royal Decree concerning certain information requirements for the offering of financial products to non-professional clients

Royal Decree concerning certain information requirements for the offering of financial products to non-professional clients

12.06.2014 BE law

Today, the Royal Decree of 25 April 2014 concerning certain information requirements for the offering of financial products to non-professional clients (the “Royal Decree”) was published in the Belgian Official Journal.

The text of the Royal Decree can be found here.

Overview

Scope

The Royal Decree introduces requirements as to the (1) advertising and (2) provision of pre-contractual information with regard to the offering (“commercialisering”/ “commercialisation”) of financial products to non-professional clients.

Financial Products

The Royal Decree broadly applies to financial products (“financiële producten”/ “produits financiers”) within the meaning of the Markets in Financial Instruments Directive as implemented in Belgium by article 2, first paragraph, 39° of the Act of 2 August 2002 on the supervision of the financial sector and on financial services (the Act of 2 August 2002). The Royal Decree’s provisions hence apply to (1) saving products (including: deposit accounts, branch 21, 22 and 26 products); (2) investment products (including: investment instruments, certain branch 23 products, saving certificates and regulated savings accounts) and (3) insurance products (together referred to as Financial Products). The Royal Decree explicitly excludes certain categories of Financial Products (including certain additional pension and insurance products) as well as Financial Products that exceed a certain threshold (for instance Financial Products that require a minimum initial investment that exceeds 100,000 EUR, or in case of open-ended UCIs, exceeding 250.000 EUR).

Non-Professional Clients

The Royal Decree applies to Financial Products that are offered to non-professional clients (“niet-professionele client”/ “client de détail”) within the meaning of the Markets in Financial Instruments Directive as implemented in Belgium by article 2, first paragraph, 29° of the Act of 2 August 2002 (Non-Professional Clients).  Accordingly, the Royal Decree also applies  to certain companies (for instance SME’s).

 

Standardisation of pre-contractual information

The Royal Decree introduces the requirement to provide Non-Professional Clients with a short, standardized and easily understandable document that outlines certain particulars of the Financial Product (Standardised Information Sheet). Non-Professional Clients must be provided with the Standardised Information Sheet free of charge and in due time before the intended purchase of (or subscription to, becoming a party to, acceptance of, signing or opening of) a Financial Product. The Standardised Information Sheet could be provided on paper, through a durable medium or through a website meeting certain requirements. The Royal Decree states which information mandatorily has to be included in the Standardised Information Sheet. The Standardised Information Sheet must further meet various detailed and technical requirements such as amongst others the requirement for information to be fair, clear and not misleading, sufficiently precise and not too technical; provisions on the inclusion of examples, on the and the mandatory inclusion of the label indicating the Financial Product’s degree of risk; the presentation of charges; the requirement as to the maximum length of the Standardised Information Sheet (i.e. three (3) A4-size pages)).

Please note that certain Financial Products are excluded. A key exception involves Financial Products that are publicly offered on the basis of a prospectus.

 

Advertising

Publicity as well as other documents communications with regard to Financial Products are governed by the Royal Decree. The Royal Decree among others:

 

  • includes requirements as to comparative advertising;
  • prohibits any misleading publicity;
  • introduces a label indicating the Financial Product’s degree of risk;
  • outlines the minimum information that must be included; and
  • contains requirements as to the presentation, in publicity, of past performance, simulated data, rankings or ratings, as well as cross-references in the publicity to a benchmark.

 

Prior FSMA approval

The Royal Decree submits advertising and Standardised Information Sheets to prior approval by the Financial Services and Markets Authority (FSMA). Prior approval by the FSMA should also be sought in the event of amendments. Please note however that certain exceptions apply.

Other amendments

As from its entry into force (see further below), the Royal Decree will not only replace, but also significantly expand the protection of non-professional clients provided by the royal decree of 18 June 2013 with regard to information requirements for the offering of regulated savings accounts 1

The Royal Decree finally amends two other royal decrees:

  • the royal decree of 14 November 2003 relating to life insurance activity (NL/FR); and
  • the royal decree of 12 November 2012 relating to certain public undertakings for collective investment (NL/FR).

Entry into force

The Royal Decree will enter into force on 12 June 2015. Please note that the Royal Decree provides for transitional measures with regard to advertising in respect of which the distribution started before such date.

 

Footnote

  1. Published in the Belgian Official Journal on 8 July 2013. The (consolidated) text of the  royal decree of 18 June 2013 with regard to information requirements for the offering of regulated savings accounts can be found here (NL) and here (FR).

All rights reserved. Care has been taken to ensure that the content of this e-bulletin is as accurate as possible. However the accuracy and completeness of the information in this e-bulletin, largely based upon third party sources, cannot be guaranteed. The materials contained in this e-bulletin have been prepared and provided by Stibbe for information purposes only. They do not constitute legal or other professional advice and readers should not act upon the information contained in this e-bulletin without consulting legal counsel. Consultation of this e-bulletin will not create an attorney-client relationship between Stibbe and the reader. The e-bulletin may be used only for personal use and all other uses are prohibited.

 

 

 

Related news

07.07.2020 NL law
Inwerkingtreding Tijdelijke Wet COVID-19 Justitie & Veiligheid

Short Reads - Op 24 april 2020 is de Tijdelijke Wet COVID-19 Justitie & Veiligheid (“de Noodwet”) in werking getreden. Aan de hand van de Noodwet kunnen rechtspersonen tijdelijk afwijken van wettelijke en statutaire bepalingen en kunnen bepaalde termijnen worden uitgesteld. De Noodwet is een antwoord op de beperkingen die gelden als gevolg van de uitbraak van COVID-19. De Tijdelijke wet COVID-19 Justitie en Veiligheid is een verzamelwet.

Read more

29.06.2020 NL law
Nieuwe publicaties van het netwerk van centrale banken en toezichthouders

Short Reads - Het Network for Greening the Financial System (NGFS) benadrukt opnieuw het toenemende belang van klimaatverandering voor centrale banken en toezichthouders. Klimaatverandering leidt tot financiële risico’s en dat betekent dat centrale banken en toezichthouders klimaat- en milieugerelateerde risico’s in hun beleid en toezicht moeten integreren.

Read more

26.06.2020 EU law
E-book: 'Practical implications of ESG disclosure regulations'

Articles - As of 10 March 2021, many financial market participants and financial advisers will be subject to new disclosure obligations following the entry into force of the EU Sustainable Finance Disclosure Regulation (SFDR) on 29 December 2019. The SFDR sets rules on transparency with a view to promoting both the integration of sustainability risks into investment processes and disclosures to investors.

Read more

29.06.2020 NL law
European Banking Federation Guidance on testing of Cloud Exit Strategy

Short Reads - Financial institutions may outsource critical or important functions to cloud service providers (“CSPs”). On 25 February 2019 the European Banking Authority (“EBA”) provided guidelines (the “EBA Guidelines”) laying out the framework for outsourcing arrangements. The EBA Guidelines require institutions to have a comprehensive, documented and sufficiently tested exit strategy (including a mandatory exit plan) when they outsource critical or important functions.

Read more

25.06.2020 NL law
Een groene encyclopedie voor de financiële sector

Short Reads - Op 22 juni 2020 is de Europese taxonomieverordening (Verordening (EU) 2020/282) gepubliceerd. De verordening wordt gezien als een mijlpaal voor de verduurzaming van de financiële sector. De Europese Commissie ziet het herstel en de wederopbouw van de economie na de coronacrisis als een kans voor een fundamentele verandering naar een duurzame economie.

Read more