Actualidad Spain

Information obligations and classification of financial products

Order ECC/2316, 4th November, on information obligations and classification of financial products

The main aim of the various regulations approved over recent years in Europe and Spain regarding the protection of financial customers has been to guarantee that customers are given true, sufficient and understandable information on the products and services they are offered, so that they can form a grounded opinion of their value and understand the risks associated to them.

Reality shows, however, that such information is still insufficient and presented in a confusing or incomplete manner, making it hard to compare different products with enough understanding to be able to reach informed decisions.

The Spanish Ministry of the Economy and Competitiveness has established this ministerial order in order to establish a standardised system of information and classification for all investment and savings products, providing a useful tool and giving financial customers and potential customers a suitable level of protection.

Transversal, simple and standard

The document is scattered with references to the principles of transversality, simplicity and standardisation.

  • Information must be transversal, so that the information and classification will be prepared for all financial products (ie, all banking products, insurance and securities and pension plans);
  • It must be simple, so that it can help customers and potential customers to compare and understand products;
  • It must be standardised so that the minimum information required will be drawn up and represented in one single standard format.


The order is applicable to (i) financial instruments covered by article 2.1 of the law on securities markets, the TRLMV (analysed in this issue)*; (ii) bank deposits (sight, savings and term accounts); (iii) life insurance products intended for saving (including insured retirement schemes); and (iv) individual and group pension plans. It excludes certain financial products covered in article 2.2.

Its scope of application includes Spanish financial institutions that are likely to market such products, and foreign institutions that do so on Spanish territory through branches, agents or under the free regime for service provision.

However, the provisions in the order will only apply for the marketing of products to non-professional customers. Companies providing discretionary and individualised portfolio services are excluded, as they take investment decisions on the behalf of their customers.

Risk indicator

The institutions must give customers and potential customers information on the risk indicator of the financial product, which must always be updated for the moment of the product’s delivery, classifying this risk into one of the six classes defined in article 5 of the order

The rating on the financial product issued by External Rating Agencies will be taken into account when classifying the risk. These are divided into two levels: Level 1 (equivalent to BBB+ or higher) and Level 2 (equivalent to BBB- or BBB).

Liquidity and complexity alert

Apart from the risk indicator, when providing information, the institutions must include information on possible liquidity limits and possible risks of early sale of the financial product.

It must also flag the complexity of the financial products, when they are complex products according to the definition in article 9 of the order, which says: "A financial product that is not simple and may be difficult to understand."

Information and representationindicador riesgo

The information given to customers and potential customers must be included in the advertising communication on the products and in the general description of the nature and risks of the product that are given before the customer takes such products out.

Both the risk indicator and the liquidity alerts and, where applicable, the complexity alerts will be represented in graphics displayed in line with the figures and indications included in the appendix.


*Consolidated Text of the Securities Market Law