AMF and ACPR Flag Gaps in Product Governance and Advice on Financial and Life Insurance Products

Key Takeaways

• Following around sixty joint audits conducted between 2020 and 2024, the AMF and ACPR have published a report identifying recurring weaknesses in product governance and client advisory practices among financial and life insurance distributors in France.
• While the findings are not a comprehensive market assessment, they highlight significant compliance gaps—particularly around target market definition, client information collection, and advice documentation—that firms should address ahead of the EU Retail Investment Strategy directive expected by end-2026.

Deep Dive

This report consolidates lessons learned from supervisory reviews conducted since the 2018 transposition of MiFID II and the Insurance Distribution Directive, focusing on marketing practices for securities accounts, equity savings plans (PEA), and life insurance contracts. Although explicitly framed as educational rather than punitive, the findings reveal persistent structural weaknesses that compliance teams at French-regulated or France-facing institutions should treat as a de facto supervisory roadmap for upcoming enforcement priorities.

Two major themes emerge. First, on product governance and oversight (POG), regulators found that target markets were often too generic, failing to differentiate by client risk tolerance, liquidity needs, or investment horizon, and that the distinction between "negative target market" and "out-of-target-market sales" was frequently misunderstood. Distributors within groups were criticized for passively adopting producer-defined target markets without tailoring them to their own client base, and product monitoring—particularly complaint-based feedback loops and review frequency—was found inadequate. Second, on advisory practices, the authorities identified widespread reliance on standardized, self-declared client data (especially regarding savings capacity and risk tolerance), insufficient documentation and traceability of advice rationale, and inconsistent application of suitability assessments, with some firms using vague "diversification" justifications rather than substantive analysis.

Key regulatory milestones referenced include ACPR Recommendation 2024-R-01 (insurance distribution), 2024-R-02 (complaints handling), and 2024-R-03 (duty to advise and client information), as well as mandatory periodic client reviews now required every 4 years (or 2 years for personalized recommendation services) under the "green industry law," effective October 24, 2024. Firms should also anticipate heightened requirements once the EU Retail Investment Strategy is finalized by end-2026.

Compliance teams should use this report to benchmark internal POG frameworks against the observed deficiencies—particularly reviewing target market granularity, negative target market definitions, distributor oversight mechanisms, and complaint integration into product reviews. Advisory functions should strengthen client data collection controls (reducing reliance on self-declaration), enhance suitability documentation and audit trails, and ensure periodic review cycles meet the new regulatory cadence. Given the explicit reference to continued AMF monitoring and 2025 SPOT control priorities, firms with identified gaps face elevated risk of future enforcement action, reputational exposure, and client redress obligations, especially concerning vulnerable or elderly customers.

Source: Autorité des marchés financiers