FRANCE Trends and Developments Contributed by: Hugues Bouchetemble and Sophie Perus, Kramer Levin Naftalis & Frankel
This recent position paper from the ACPR means that a very large number of management com - panies that did not previously have insurance intermediary status will have to adopt this sta - tus in the near future. It also means that Euro - pean management companies will have to opt for insurance intermediary status in their home country and then transfer this activity to France, or else set up a subsidiary in France with insur - ance intermediary status, specifically to carry out this new activity. As a result, the entire landscape of asset man - agement through insurance products is being significantly altered. This tightening of access to unlisted products for retail customers has led to a shift, initiated several years ago, towards restricting the pos - sibility of distributing such products outside the framework provided by the legislature. French System Hostile to Unlisted Products Held in Securities Accounts Over the last few years, the French regulator has gradually restricted the possibility of dis - tributing unlisted products to retail clients, not in insurance products but directly in securities accounts. This restriction has taken the form of several decisions by the regulator which, when taken together, make it increasingly difficult to distrib - ute these products on the French market. Financial investment advisers prohibited from classifying clients as professionals On the French market, most of the savings invested in securities’ account products are dis - tributed by financial investment advisers, a local status that allows certain professionals to pro - vide investment advice without being authorised
as investment services providers under Directive 2014/65/EU (MiFID II), provided they meet cer - tain conditions, including membership with an authorised professional association. Insofar as unlisted products are generally reserved for professional clients within the meaning of MiFID II, these financial investment advisers used to either classify the client as a professional client themselves, or rely on the classification of professional clients made by the producer of the product (management company or investment firm). The regulator has put an end to these two practices, pointing out that financial investment advisers are prohibited from catego - rising clients. The regulator has also reiterated that financial investment advisers cannot rely on the categorisation carried out by the producer of the product on the grounds that the producer has no prior direct contractual relationship with the investor. Qualification of “other AIFs” One of the main challenges of Directive 2011/61/ EU (the “AIFM Directive”) was to regulate invest - ment products (whatever their form: shares in companies, trusts, unincorporated entities) as long as they met certain very general conditions that qualify them as investment funds. These funds are referred to as “other AIFs” when they are not specifically listed under French law. In this context, one of the main constraints on the French market for unlisted products in the form of club deals is to determine whether or not these products meet the conditions for clas - sification as “other AIFs”. The consequences of this qualification are important. If the product qualifies as an “oth - er AIF”, it must, among other conditions, be authorised by the Autorité des marchés financi-
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