The MiFID II product governance regime requires financial institutions to identify a target market of investors for all products they design or offer to clients, and to sell those products, as a rule, within the target market only.
Although the aim of the regime – reducing mis-selling – is commendable, it has been implemented in a less than perfect way. After briefly describing the MiFID II product governance rules, this contribution discusses four major shortcomings, which have a detrimental effect on investor protection and the level playing field between financial institutions. The author proposes small amendments, which not only deal with those shortcomings, but also alleviate the compliance burden for the sector and lessen the regime’s paternalistic edge.