Consumer protection

MiFID II / Liechtenstein

The Liechtenstein banking centre implemented the Markets in Financial Instruments Directive (MiFID) on 1 November 2007. MiFID simplifies cross-border financial services and allows investment firms, banks and stock markets to also offer their services in other EU / EEA member states. Furthermore, they are required to conduct precise client and product analyses as well as disclose information on compensations and commissions.

The accompanying Regulation (MiFIR) also came into force on 3 January 2018. It provides for more extensive regulation of the financial markets and investment services. MiFIR also regulates trading transparency. Besides the refinement of regulations since MiFID, the aim of MiFID II is to create greater transparency in the markets and to increase investor protection. High-frequency trading is transparent and subject to supervisory controls. Position limits on commodity trading are strict. Throughout the EU, consultations at bank branches and consultations by telephone must record and document in a comprehensive manner why a financial product was recommended and how it matches the client’s risk profile.

In Liechtenstein, the legislative process for implementation at national level has been completed. The amendments came into force on 3 January 2018. LLB has implemented MiFID II within the specified time.

FinSA / Switzerland

Switzerland intends to conceptually reshape the guiding principles of its financial centre in order to transpose investor protection issues arising from MiFID II, in particular, into national law. The two corresponding bills, the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA), were adopted on 15 June 2018. FinSA and FinIA create a level playing field for financial intermediaries and improve client protection. The FinSA contains rules of conduct towards clients that financial service providers must comply with. It also provides for prospectus requirements and requires a basic information sheet for financial instruments that is easy to understand. The FinIA essentially standardises the authorisation rules for financial service providers. The two acts together with the implementing ordinances enter into force on 1 January 2020.

New rules of the game in the EU payment systems market

For LLB, the harmonisation and the digitalisation of the European payment systems market are important topics. As an EEA country, Liechtenstein adopted the second EU Payment Services Directive (PSD2) in 2019. The revised Payment Services Act came into force on 1 October 2019. The PSD2 introduces new information and liability rules for payment service providers that are aimed at improving customer protection. It also requires strong customer authentication and limits the scope of previous exemptions. In this connection, two new types of financial intermediary, namely the payment initiation service provider and the account information service provider, have been created. At LLB, the adjustments required to implement the PSD2 have been made.

EU Mortgage Credit Directive

The Directive 2014 / 17 / EU on credit agreements for consumers relating to residential immovable property has been in force in the EU member states since 20 March 2014. It creates a single legal framework for the granting of mortgage credit to consumers in the internal European market. As a member of the EEA, Liechtenstein is obliged to transpose this directive into national law. The corresponding legislative process is underway; it is expected to come into force in January 2021. The directive serves to protect consumers taking out loans to buy residential property. Under the directive, the banks are subject to various requirements when granting a loan. These include, in particular, (pre-)contractual information requirements, creditworthiness assessment requirements and qualification requirements for bank employees involved in granting loans.

LLB is in the process of implementing the directive. The specialist departments and marketing and distribution units analysed the new provisions in 2019 and will incorporate them into the relevant processes in 2020. The advisory process, in particular, will be adjusted due to legal requirements.