Answer 1:
1. NCAs should pay particular attention to the assessment of appropriateness when a firm offers CFDs or other speculative products to retail investors, given that these are complex products that are not appropriate for a majority of retail investors [This Q&A should be read in conjunction with ESMA’s supervisory briefing on appropriateness (ESMA/2012/851).]. First of all, it is important that the assessment of appropriateness is introduced to the potential client in an objective manner. The test should be presented as assessing the client’s financial experience and knowledge with a view to determining whether specific financial products are appropriate. The test is therefore in the client’s interest, and should be presented as such, rather than a ‘tick box’ exercise.
2. In order to be able to assess the appropriateness of CFDs or other speculative products for retail investors, firms should ensure that the information collected about the client’s knowledge and
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