Gatekeepers: A Crucial Component of Italy’s Regulatory Structure

In Italy, gatekeepers play a vital role in ensuring that supervised entities operate in accordance with applicable laws and regulations. This article provides an overview of the key components of Italy’s regulatory structure, including directors’ duties, private rights of action, standard of care for customers, rule making, cross-border issues, international standards, and updates and trends.

Directors’ Duties and Liability

According to Italian law, directors of financial services firms are required to act in the sole interest of the company. They must fulfill specific integrity, professionalism, and independence requirements, as well as satisfying certain competence and correctness criteria. Directors also have a duty of correct administration, which involves the efficient management of the company.

• Key responsibilities:
  • Act in the sole interest of the company
  • Fulfill integrity, professionalism, and independence requirements
  • Satisfy competence and correctness criteria
  • Manage the company efficiently

Private Rights of Action

Private subjects may report any suspected breaches of national financial services authority rules to Consob and the Bank of Italy. These reports are an important source of information for the supervisory authorities, who may decide to request information or conduct on-site investigations.

• Key points:
  • Private subjects can report suspected breaches
  • Reports provide valuable information for supervisory authorities
  • Authorities may request information or conduct investigations

Standard of Care for Customers

The standard of care required in the provision of investment services and activities to retail clients is higher than that required for professional clients or eligible counterparties. Retail clients have little knowledge and experience in the financial services sector and investments, and therefore deserve the maximum level of protection.

• Key points:
  • Higher standard of care for retail clients
  • Retail clients require maximum level of protection

Rule Making

Before adopting new rules affecting the financial services industry, Italian authorities typically start a public consultation process. This includes both primary and secondary law sources, with Consob and the Bank of Italy required to consult on any proposed amendments to their regulations.

• Key points:
  • Public consultation process for new rules
  • Both primary and secondary law sources consulted

Cross-Border Issues

National financial services authorities in Italy approach cross-border issues by ensuring that supervised entities comply with relevant EU rules and international standards.

• Key point:
  • Entities must comply with EU rules and international standards

International Standards

Italian law and regulations relating to the financial services sector and banking sector largely derive from the transposition of EU rules and implementation of international standards issued by organizations such as the Bank for International Settlements (Basel Committee) and International Organization of Securities Commissions (IOSCO).

• Key points:
  • Italian laws and regulations based on EU rules and international standards
  • Organizations like Basel Committee and IOSCO play a key role

Update and Trends

Several important updates are expected in 2018 regarding the regulatory framework relating to the provision of financial services. These include the updated version of the Consolidated Finance Act, which transposes new regulations introduced by MiFID II, as well as updates to Consob implementing regulations on markets and intermediaries.

• Key points:
  • Expected updates in 2018
  • Consolidated Finance Act to be updated
  • MiFID II regulations to be implemented