Information Requirements as a Tool to Protect Consumers Receiving Investment Services

The European Directive on Markets in Financial Instruments (hereafter MiFID) and its implementing Directive (hereafter Implementing Directive) impose on investment firms among others rules of conduct that have to be respected when providing investment services to their clients. The aim of these rules is to preserve the investors' interests as shown by article 19 MiFID which determines that an investment firm must always act honestly, fairly and professionally in accordance with the best interests of its clients.Several of these rules of conduct create the obligation for the investment firm to provide the investor with information as well as the obligation to obtain information from the investor. The main idea behind these rules is that an investor will only be able to make an informed decision when he has been clearly informed about the services offered (and their risks) and that an investment firm can only provide investment services in accordance with the clients' best interests when it knows what kind of customer it is dealing with. The aim of this paper is to discuss and evaluate these information requirements which vary depending on the category of investors to whom investment services are provided and depending on the kind of investment services that are being provided. More specifically, it aims at investigating whether these rules will be effective in protecting private investors