Introduced by the law of August 1, 2003, the status of financial investment advisor (FIA) aims to strengthen investor protection through better supervision of this player in the marketing of financial products. All FIAs are subject to a certain number of obligations and prohibitions, controlled by the AMF.
Conditions of access and exercise of the CIF
Broadly speaking, in addition to the obligation to join an association of FIAs approved by the AMF, all intermediaries must meet the following conditions:
- The condition of habitual residence in France;
- Condition of age and good character;
- Condition of professional capacity;
- Condition of professional liability insurance.
The condition of habitual residence in France:
The status of FIA requires individuals and legal entities to be ordinarily resident in France, pursuant to the last paragraph of Article L. 541-2 of the Monetary and Financial Code.
Age and Good Character Requirements:
In order to practice, the FIA, whether an individual or a person with the power to manage or administer an authorized legal entity, must meet the following conditions (Articles L. 541-2 and D.541-8 CMF):
- a condition of age: to have the legal majority;
- the conditions of good repute in accordance with article L. 541-7: not to be subject to the incapacities of article L.500-1 CMF (like the IOBSPs) and/or not to have been the subject of a sanction pronounced by the AMF of prohibition of practice either temporarily or definitively.
Professional capacity requirement:
The conditions of professional competence required to benefit from this status are set out in the new version of Article 325-1 of the AMF General Regulation. Therefore, in order to practice, the FIA must justify :
- or a national diploma attesting to three years of higher education in law, economics or management, or a title or diploma of the same level, suitable for carrying out the operations mentioned in I of article L. 541-1 of the monetary and financial code;
- or a professional training of at least 150 hours, acquired with an investment services provider, an association of financial investment advisors or a training organization, adapted:
– to the realization of operations on the financial instruments (art, L. 211-1 of the cmf);
– the provision of investment services, (article L. 321-1 of the cmf);
– to the realization of operations on various goods (‘article L. 550-1 of the cmf).
- or two years’ professional experience, acquired during the five years preceding his or her entry into service, in functions related to the performance of the operations described above. The professional experience must have been acquired with an investment services provider, a financial investment advisor, a tied agent of an investment services provider or an insurance intermediary.
With regard to the above-mentioned diploma, AMF Instruction n°2013-07 published on April 24, 2013, provides that it be registered in the National Directory of Professional Certifications, in one of the following nomenclatures of training specialties:
– 122 (Economics),
– 128 (Law and Political Science),
– 313 (Finance, banking, insurance and real estate),
– 314 (Accounting, Management).
Degrees or diplomas of the same level include foreign degrees recognized by the ENIC-NARIC Center8 on the basis of a certificate of comparability.
Within the framework of the provisions relating to the obligation of updating the knowledge of the members at the charge of the professional associations, the eligible training for the professional capacity of the CIF includes the topics fixed by the instruction such as:
– general knowledge of financial investment advice;
– general knowledge of how to market financial instruments;
– rules of good conduct for ICFs;
– the rules of organization of the CIF.
Pursuant to Article L.541-2 of the CMF, the conditions of professional capacity and good repute apply to “FIAs who are natural persons, as well as natural persons with the power to manage or administer a company carrying on the activity of financial investment advisor”.
D) Professional liability insurance requirement:
Financial investment advisors must, in order to practice, have professional liability insurance covering the pecuniary consequences of their activity, in accordance with article L. 541-3. The threshold of this guarantee differs depending on whether the advisor is a natural person or a legal entity with at least two employees:
- For natural persons and legal entities with less than two employees: 150,000 euros per claim and 150,000 euros per insurance year;
- For legal entities with at least two employees: 300,000 euros per claim and 600,000 euros per insurance year.
These guarantees take effect on March 1st for a period of twelve months, the contract is tacitly renewed on January 1st of each year.
In accordance with Article D.541-9 (paragraph 2), FIAs exercising an advisory activity, dealing exclusively with services related to the investment services of Article L.321-2 CMF, are not subject to the amounts mentioned above.
ORIAS does not have the competence to control the number of employees within legal entities, within the framework of the differences in minimum coverage thresholds, and is not, at this stage, in a position to give an opinion on the application of the last paragraph of D. 541-9.
This is the reason why the minimum thresholds of control of the coverage of the professional civil liability of the FIAs will be 150.000 euros per claim and 150.000 euros per insurance year.
Special provisions
As a derogation from the Markets in Financial Instruments Directive (MiFID), the latter cannot be exported thanks to the European passport, which has been applicable to insurance intermediaries since the DIA, nor within the European Union and the European Economic Area, under the terms of Article L. 541-8 of the Monetary and Financial Code.
The Autorité des Marchés Financiers, in its position-recommendation n°2006-23 as amended, answers in paragraph 3.2 to the question relating to the FIA legal entity managed or administered by a legal entity.
“The first paragraph of Article L. 541-2 of the Monetary and Financial Code, relating to the conditions of access to the status of FIA in terms of age, good repute and professional competence, refers only to “financial investment advisors who are natural persons” and “natural persons with the power to manage or administer legal persons authorized as financial investment advisors”.
It follows from this provision that only natural persons may manage or administer a legal person FIA and appear in this capacity in the register of intermediaries kept by ORIAS, according to Article 1 of the Order of March 1, 2012 on the single register.”
Therefore, by way of example, CIF legal entities whose legal form is a simplified joint stock company (SAS) with a separate legal entity as President are not admitted.
AMF Position-Recommendation N° 2006-23, as amended, introduces a new rule of non-cumulation of categories for FIAs and ALPSIs, in paragraph 2.1 b).
“Given the differences in regime, the distinct scope of activities that each of these two statuses allows, and the obligation for the FIA to behave loyally and act fairly in the best interests of his clients (Article L. 541-8-1 of the Monetary and Financial Code), an FIA must not combine his status with that of tied agent.
