The MiFIR and PRIIPs Product Intervention Regime: In Need of Intervention?

As from January 2018, MiFIR and the PRIIPs Regulation provide national supervisors with competences to adopt measures restricting or limiting financial activities or practices, or the marketing, distribution or sale of financial instruments, structured deposits and insurance-based investments. Moreover, these regulations give competences to the European Supervisory Authorities (ESMA, EBA and EIOPA) to coordinate and facilitate national product intervention measures in order to safeguard the level playing field. In addition, the European Supervisory Authorities can also directly prohibit or restrict the same products, activities or practices in the entire Union, albeit only temporarily.In this contribution we first offer a discussion of the historical evolution of product intervention, including an overview of national measures taken in a number of Member States before the entry into force of the MiFIR and the PRIIPs Regulation. Then we scrutinize the conditions of the MiFIR and PRIIPs product intervention regime and examine ESMA’s first product intervention measures. Finally, we take a critical look at the scope of application of the product intervention measures based on MiFIR.We conclude that the MiFIR and PRIIPs product intervention measures can be considered the keystone of the EU investor protection regime. Since a well-functioning product governance regime should make product intervention measures superfluous in the majority of circumstances, we welcome the fact that national and European authorities have shown restraint and only introduced product intervention measures in regard of a very limited number of products. Nevertheless for the product intervention regime to optimally function, we have argued in favour of a number of changes in the regulations and in the way they are interpreted.