This initiative, in collaboration with national competent authorities (NCAs), aims to assess how Cyprus Investment Firms (CIFs) integrate sustainability considerations into their suitability assessments and product governance processes.

• Client sustainability preferences: Evaluating how firms receive information with respect to their clients’ sustainability preferences.
• Investment product categorisation: Ensuring that firms classify investment products based on sustainability factors in relation to suitability assessment.
• Investment suitability: Examining how a firm ensures that its investment aligns with sustainability objectives, including a portfolio-based approach.
• Target market assessment: Assessing how firms describe sustainability-related objectives with respect to investment products.

CySEC will conduct on-site visits and desk-based reviews to a number of CIFs which provide investment advice and portfolio management to clients within the retail industry. These reviews, covering the period from 2 August 2022 to 31 December 2024, will help CySEC identify whether CIFs ensure compliance with MiFID II sustainability obligations enhancing also investor protection.

CIFs must align with the content of the CySEC announcement, as adherence to this content will be part of CySEC’s supervisory review for the CSA 2024-2025. Firms should proactively review their processes to ensure compliance with the sustainability obligations under MiFID II.

CySEC’s press release can be found here.