ESMA to investigate conflicts of interest in the distribution of investment products- joint supervisory action

The European Securities and Markets Authority (ESMA) has announced that in 2026 it will launch a Common Supervisory Action together with National Competent Authorities, aimed at reviewing how firms identify, prevent, and manage conflicts of interest when offering investment products to retail clients.

What will be the focus of ESMA’s joint supervisory action- MiFID II objectives and scope of control

The supervisory action will assess whether investment firms operate in compliance with MiFID II requirements, ensuring that product recommendations are not driven by the firm’s own profit, commissions, or employee remuneration schemes.

Particular focus will be placed on:

• the impact of employee remuneration and financial benefits received from product providers on the choice of offered investments,
• the role of digital investment platforms in directing clients toward specific products,
• managing potential conflicts between the firm’s interests and the needs of retail investors.

The impact of ESMA’s supervisory action on fintechs and investment platforms- what does this mean for business?

Regulators will pay special attention to how recommendation algorithms and digital platforms may influence investor decisions.

The joint supervisory action will enable the exchange of experience among supervisory authorities and contribute to the harmonisation of supervisory practices across the European Union, thereby strengthening investor protection.

The Common Supervisory Action by ESMA and National Competent Authorities will be carried out in 2026, and its findings may have significant implications for the business models of fintechs, brokers, and investment platforms, particularly those based on commissions and digital recommendations.

ESMA supervisory activities

ESMA’s new supervisory activities send a signal to investment firms, fintechs, and digital platforms that conflicts of interest and MiFID II compliance will be subject to close scrutiny.

If you want to prepare your organization for the upcoming supervisory action, identify areas of risk, and adjust your compliance policies, contact the Dudkowiak & Putyra team.