Policy Brief
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PB 4/2024: Does MiFID II enable private investors to invest sustainably?
- MiFID II is a comprehensive regulatory framework aimed at increasing transparency and oversight in the European financial markets, improving investor protection, and preventing market abuse.
- Amendments in 2021 to MiFID II require investment advisors to query investors’ sustainability preferences during investment consultations.
- A field study conducted by Cauthorn, Eckert, Kellers, Klein and Zwergel (2024) shows that investors are not recommended the types of sustainable products they want, and investment advisors frequently fail to query sustainability preferences.
- While the changes to MiFID II, which came into force in August 2022, were supposed to enhance financial market transparency and bolster private investors’ access to sustainable products suited to their preferences, it seems the implementation of the regulation has not been as successful as hoped.
- The regulator should simplify the sustainability preference query and improve oversight to ensure that investment advisors better match their recommendations to their clients’ preferences.
