RUS NFA Financial Product Standard

On Aug. 12, RUS NFA draft standard for sale of financial products.

  • A draft internal standard establishing requirements for the sale of financial products.
  • Standard
  • Developed to counteract the sale of some financial products under the guise of others.
  • Covers sale (offer) of products under brokerage (dealer) activities, trust management activities, agent activities and offer of financial instruments belonging to professionals.
  • The draft internal standard defines the basic principles for offering financial products.
  • And requirements for interacting with individuals, methods for providing information.
  • Information must not be misleading and should include product characteristics, risks.
  • Principles of good faith, reliability and completeness apply to the information provided.
  • The standard lists the financial products that are difficult for consumers to understand.
  • Purchaser should be provided with passport regarding financial instrument, containing data about the product, information about its characteristics, risks and the expenses.
  • The passport of a complex financial product is developed and updated by the issuer.
  • When selling a product, an employee must not present as investment consultation.
  • He must not comment, judge, evaluate, advise on suitability of the financial products.
  • On the contrary, consultant must explain to the client it may not be suitable for him.
  • Status
  • RUS NFA invited comments and suggestions on the draft internal standard.
  • The standard is a joint internal document, signed simultaneously by two Associations.
  • The amendments made to it will also be agreed upon by the RUS NFA and NAUFOR.
  • It will be monitored by RUS NFA Control Service and fines may be issued for violation.
  • Mis-selling cases are also identified by RUS CB Consumer Rights Protection Service.
  • Violation can be detected both by client’s complaint and during a routine inspection.

Regulators RUS NFA
Entity Types B/D; Bank; Corp; Exch; Fiduciary; IA; IB
Reference PR, 8/12/2019
Functions Advertising; Complaints; Compliance; Financial; Operations; Reporting; Risk; Suitability; Trading; Treasury
Countries Russia
Products Banking; Corporate; Derivatives; Fixed Income; Forex; Fund Mgt; Securities
Regions EMEA
Rule Type Proposed
Rule Date 8/12/2019
Effective Date 8/12/2019
Rule Id 63853
Linked to N/A
Report Issue 8/15/2019
Report Section International

Last substantive update on 08/14/2019