CSSF findings/observations on the content and use of marketing communications

On 23 August, the CSSF published its findings and observations from the thematic review it launched in 2022-2023 in respect of the content and use of marketing communications (“MC”) by UCITS ManCos and AIFMs under the CBDF Regulation (“CSSF MC Findings and Observations”).

The main findings and expectations of the CSSF are summarised below:

Identification as such of marketing communication: All MCs must be identified as such by means of a prominent disclosure of the terms "marketing communication" even if the support is a website or a social media platform (a disclaimer at the end of the document being not sufficient).

Consistency with fund's documents: The wordings and indicators used in the MC, the KID or KIID, the prospectus or equivalent, and the SFDR required disclosures must be consistent. In particular, in relation to the description of the features of the investments, the CSSF notes that the data in the MCs are either not in line with the content of the fund documents or do not include sufficient information for the target investors/potential investors to understand the key elements of those features (e.g. leverage, type of eligible assets, recommended holding period, etc.).

Suitability of the marketing communication for the target investors or potential investors: The CSSF recommends that the MC clearly identifies the type of investors targeted and further expects that (i) all information contained in a MC is easily readable, that all acronyms and all terms describing the investment used in the MC are properly defined and understandable by the target investors, (ii) when the MC displays a label, a certification or ratings, firstly the information must be sufficiently precise concerning the fund/sub-fund rewards and the year concerned (where applicable) and secondly there must be a reference to the entity that granted this label (etc.), i.e. including at least a hyperlink to a website where an investor/potential investor can find further information. Regarding hyperlinks, the CSSF expects that the use of hyperlinks should be limited and that, if used, such hyperlinks point to the exact place where the relevant information may be found.

Mandatory references to the availability of fund documents: All the information prescribed by CBDF Regulation and ESMA Guidelines in relation to the availability of the fund documents must be included in the MC (i.e. information that a prospectus exists and that the KID (in case of distribution to retail investors) is available by specifying where, how and in which language, with hyperlinks to or website addresses for those documents. The MC must also contain clear information that the UCITS ManCo/AIFM may decide to terminate the arrangements made for the marketing of UCITS/AIFs under the UCITS/AIFMD passport as relevant.

Information on risks and rewards: In the sample of MCs tested that disclosed risks and rewards, the main weaknesses and points of improvement observed by the CSSF were the lack of consistency of information disclosed with the fund's documents and the lack of indication on where to find complete information on risks. Accordingly, the CSSF expects risk sections to be properly tailored to the fund/sub-fund promoted and a prominent indication on where to find complete information on risks to be disclosed even for MCs addressed to professional investors only.

Information on costs: The CSSF is of the view that in order to be fair, clear and not misleading, a MC that presents costs should display the periodicity of these costs as well as a prominent indication that NOT all costs are presented, and that further information can be found in the prospectus or equivalent.

Information on performance and benchmark: In line with ESMA, the CSSF expects (i) the periodicity criteria to disclose performance to be respected, (ii) the consistency with fund's documents to be ensured, and (iii) any changes significantly affecting the past performance of the promoted fund to be prominently disclosed. In addition, more transparency on the use of a benchmark is required.

Information on sustainability-related aspects: In line with Section 6.5 of the ESMA Guidelines on marketing communications which states, among other things, that when disclosing information on the sustainability-related aspects, the MC should include a link to the website where information on sustainability-related aspects is provided in relation to the promoted fund, the CSSF expects the link to a given website in the MC to point to information related to the specific fund/sub-fund promoted and not to generic information. The CSSF also expects a good balance between disclosures on sustainability-related aspects and other aspects of the investment strategy of the promoted fund/sub-fund.

Short MC (e.g. messages on social media): The CSSF reminds that the MC should be as neutral as possible and that it should indicate where more detailed information is available, in particular by using a link to the relevant webpage where the actual information documents of the fund/sub-fund are available (i.e. not to the homepage of the IFM).