The Autorité de Contrôle Prudentiel et de Résolution (ACPR) and the Autorité des Marchés Financiers (AMF) Joint Unit for Insurance, Banking, and Retail Investment published its 2024 Annual Report, shedding light on the evolving landscape of financial regulation in France.
Simultaneously, the AMF released research findings from its inspections focused on verifying and assessing employee knowledge within asset management firms.
These publications underscore France’s commitment to enhancing investor protection, combating financial scams, and ensuring robust oversight in a rapidly digitizing financial sector.
The Annual Report highlights the Joint Unit’s response to significant economic shifts over the past two years, particularly rising interest rates and inflation, which have altered retail investors’ expectations of financial products.
These changes have prompted the ACPR and AMF to adapt their supervision of commercial practices to better safeguard consumers.
The report emphasizes the growing digitalization of financial services, which, while offering convenience, has fueled a resurgence of scams.
In 2024, the AMF shut down 181 fraudulent investment sites, with victims losing an average of €29,500 each, and imposed €26.5 million in sanctions to curb digital fraud, particularly targeting younger investors lured through social media platforms.
The Joint Unit’s efforts extend beyond scam prevention.
It has focused on refining its understanding of the financial market by analyzing assets under management, marketing methods, and emerging trends.
In 2023, the ACPR held discussions with the industry on the “value for money” of unit-linked products in life insurance and retirement savings plans, aiming to ensure these products deliver fair outcomes for investors.
The AMF complemented this by publishing a guide urging financial institutions to adopt standardized fee terminology, enhancing transparency for retail investors.
The report also underscores France’s role in advancing the European Union’s Savings and Investment Union, a priority highlighted by AMF Chair Marie-Anne Barbat-Layani.
She emphasized the need for €1 trillion in additional annual financing to support Europe’s energy transition, digital transformation, and defense needs.
This vision includes mobilizing European savings, establishing unified capital market supervision, and revitalizing securitization markets to channel funds effectively.
Concurrently, the AMF’s inspection findings reveal critical insights into the asset management sector’s compliance with employee knowledge requirements.
Conducted in 2024, these inspections assessed whether employees in asset management firms possess the necessary expertise to perform their roles effectively.
The AMF found that while many firms have robust training frameworks, gaps remain in ensuring consistent knowledge verification across all staff levels.
Some firms lacked formalized processes to assess employee competencies, particularly in complex areas like sustainable finance and digital asset services.
The AMF stressed the importance of ongoing training to keep pace with regulatory changes, such as the Markets in Crypto-Assets (MiCA) regulation, effective from December 30, 2024, which establishes a stringent framework for crypto-asset services across the EU.
The inspections also highlighted deficiencies in certain firms’ adherence to “know your customer” (KYC) protocols, echoing findings from previous years.
In 2017, similar inspections revealed shortcomings in collecting KYC information for products like Euro Medium Term Notes (EMTNs) and redeemable subordinated securities.
The 2024 findings indicate progress but call for stricter adherence to ensure tailored advice, especially for vulnerable clients like the elderly.
Both reports reflect France’s proactive stance in strengthening financial oversight.
The Joint Unit’s collaboration with TRACFIN, France’s anti-money laundering authority, has bolstered efforts to combat financial crime, with enhanced information sharing and risk-based supervision of financial institutions.
The AMF’s focus on natural language processing and machine learning to detect fraud further demonstrates its embrace of technology to enhance regulatory efficiency.
Looking ahead, the ACPR and AMF aim to deepen their oversight of digital asset service providers (DASPs), with over 100 registered since the 2019 PACTE Law.
The Joint Unit’s 2024 report and the AMF’s inspection findings signal a clear message: as financial markets evolve, so must the mechanisms to protect investors and maintain market integrity.
These efforts and initiatives position France as a key player in fostering a secure and transparent financial ecosystem.