The mission of CySEC is to safeguard investors protection and the healthy development of the securities market. Furthermore, the vision of CySEC is to establish the Cyprus securities market as one of the most reliable, safest and attractive jurisdiction for investment. Recently, CySEC set standards and guidelines to assist the Cyprus Investment Firms (CIFs) in meeting their obligations. Specifically, the Circular 181 (C181) focuses on constructing a robust framework concerning the control and monitoring of misleading sales and marketing practices.
Specifically, the Circular 181 establishes criteria for the assessment of skills, knowledge and competence for staff involved in the provision of information to clients and, sales and marketing operations. In other words, the Circular 181 applies to persons who communicate with potential and current clients in order to promote the CIF’s services and products, as well as, to provide information regarding investment and ancillary services and financial instruments that a CIF offers.
The Circular 181 clarifies that sales and marketing staff must not provide investment advice to clients. Nevertheless, if the CIF is authorised to provide investment advice, it shall be provided exclusively by authorised and qualified staff of the department that is responsible to do so. Furthermore, CIFs must ensure that the sales and marketing staff uses its real name and not an alias or a fake name, and does not provide false information regarding credentials when communicating with clients.
According to Circular 181, sales and marketing staff must NOT:
- Make frequent and repeated telephone calls to clients;
- Use aggressive language;
- Exercise pressure on clients;
- Urge or advise clients to invest or to deposit funds;
However, the aforementioned Circular does not apply to employees who:
- Point out where clients can find information or direct clients on a CIF’s website to find relevant information a client is seeking;
- Provide technical support to clients in relation to the platform, website and account opening procedure;
- Provide technical support in uploading documents in the platform;
- Accept clients’ phone calls and redirect said clients to relevant departments;
- Produce marketing and promotional material;
- Perform back office functions;
CIFs may outsource sales and marketing activities to third parties/service providers only if they can demonstrate to CySEC that the service provider matches the standards of the regulated CIF. In addition to this, CySEC needs to have effective access to the business premises of the service provider. CIFs are obliged to supervise and effectively oversee, monitor and take the necessary measures in case the service provider is not performing sales and marketing activities according to the provisions of the relevant legislation.
The legal team of Michael Chambers & Co. LLC provides legal services to investment firms based in Cyprus or abroad. If you wish to speak to one of our Cyprus lawyers, in absolute confidence, then please contact us: [email protected].