The Brussels Court of First Instance referred to the public prosecutor the file of an insurance broker who had gone a little too far in assisting his client, actively advising him on financial products. Carrying on investment advice or portfolio management without the appropriate authorisation is a criminal offence.<\/p>\n
Under the Act on access to the activity of providing investment services and on the status and supervision of portfolio management and investment advice firms, firms whose usual activity consists in providing or offering investment services to third parties on a professional basis, or carrying on investment activities, must first obtain authorisation as an investment firm or as a portfolio management and investment advice firm. What of insurance intermediaries authorised to distribute insurance products but not to advise on financial-instrument operations?<\/p>\n
Can a broker provide an investment service on an ancillary basis, escaping the need for prior authorisation? MiFID recital 30 excludes persons providing investment services only on an ancillary basis in a regulated professional activity, provided the relevant regulation does not exclude ancillary investment services. Delegated Regulation 2017\/565 sets conditions: a close and factual link between the professional activity and the investment service to the same client; the investment service not providing a systematic source of income; and the person not marketing or promoting its ability to provide investment services, except as ancillary to the main activity.<\/p>\n
An investor had contacted a company authorised to act as an insurance intermediary. In 2010, he signed, as policyholder, two branch 23 life insurance documents issued by a Luxembourg company, with the broker’s manager as the intermediary. Alongside these, the investor and the broker signed a mandate authorising the manager to represent the investor before the insurer to carry out, in his name, all information requests, all arbitrage operations, all additional payments and all redemptions for an unspecified amount. Over 18 months, the broker carried out 28 arbitrage operations (92 buy-and-sell operations on the fund’s securities), several signed by the investor. The investment proved unsuccessful, and the dissatisfied insured redeemed his contract in 2018, then sought compensation, arguing that the broker had been entrusted with a discretionary portfolio-management mandate in breach of the Act of 6 April 1995 (in force at the time), lacking the required authorisation. The broker relied on two exceptions: ancillary investment service, and non-specifically-remunerated investment advice.<\/p>\n
The court held that the contract was indeed portfolio management as defined by law, the investor having mandated the broker to carry out arbitrage operations on the branch 23 contract in his name. This manifestly exceeded the mere placement advice possible when choosing a branch 23 contract, and was discretionary, the broker having power to carry out acts of disposal and administration on the investor’s assets. The fact that the investor himself signed some arbitrage forms did not mean the mandate was not implemented. The broker could not rely on the ancillary exception, since this management activity could not reasonably be said to be ancillary: an insurance broker’s role is to connect the policyholder with insurers, give personalised advice and manage administrative aspects, not to manage financial assets discretionarily, even underlying a branch 23 policy. The broker was therefore required, before starting, to obtain FSMA authorisation as a portfolio management and investment advice firm.<\/p>\n
This article is a translation. Only the French version is authoritative. It is provided for information purposes and does not constitute legal advice.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" The Brussels Court of First Instance referred to the public prosecutor the file of an insurance broker who had gone a little too far in assisting his client, actively advising him on financial products. Carrying on investment advice or portfolio management without the appropriate authorisation is a criminal offence. The need for prior authorisation to… Continue Reading →<\/a><\/p>\n","protected":false},"author":185562167,"featured_media":3834,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","advanced_seo_description":"A Brussels court: an insurance broker who arbitraged a branch 23 contract on discretionary mandate carried on unauthorised portfolio management, a criminal offence.","jetpack_seo_html_title":"Can an Insurance Broker Advise on an Investment? (Belgium)","jetpack_seo_noindex":false,"jetpack_seo_schema_type":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":true,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_wpcom_ai_launchpad_first_post":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[6325],"tags":[],"class_list":["post-9540","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-non-classe","clear","fallback-thumbnail"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/droitbancaire.be\/wp-content\/uploads\/2021\/05\/not-3819029_1280.jpg?fit=1280%2C570&ssl=1","jetpack_likes_enabled":true,"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbYDZD-2tS","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/droitbancaire.be\/en\/wp-json\/wp\/v2\/posts\/9540","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/droitbancaire.be\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/droitbancaire.be\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/droitbancaire.be\/en\/wp-json\/wp\/v2\/users\/185562167"}],"replies":[{"embeddable":true,"href":"https:\/\/droitbancaire.be\/en\/wp-json\/wp\/v2\/comments?post=9540"}],"version-history":[{"count":1,"href":"https:\/\/droitbancaire.be\/en\/wp-json\/wp\/v2\/posts\/9540\/revisions"}],"predecessor-version":[{"id":9541,"href":"https:\/\/droitbancaire.be\/en\/wp-json\/wp\/v2\/posts\/9540\/revisions\/9541"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/droitbancaire.be\/en\/wp-json\/wp\/v2\/media\/3834"}],"wp:attachment":[{"href":"https:\/\/droitbancaire.be\/en\/wp-json\/wp\/v2\/media?parent=9540"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/droitbancaire.be\/en\/wp-json\/wp\/v2\/categories?post=9540"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/droitbancaire.be\/en\/wp-json\/wp\/v2\/tags?post=9540"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}