What needs to be built?
Design onboarding, assessments, order flow, reconciliation, complaints and reporting as end-to-end processes. The precise arrangements depend on the business model, the firm’s scale and the applicable rules.
REGULATORY TOOLS / PROCESSES
From client contact to reporting
Design onboarding, assessments, order flow, reconciliation, complaints and reporting as end-to-end processes.
Typical evidence
Process maps, controls, exception and escalation rules.
Question before launch
Has each handover between interface, execution and control been tested?
Regulatory context
This map illustrates typical investment services in Germany. It is neither an exhaustive checklist nor a supervisory sign-off. Other activities may have different obligations.
MiFID II · Art. 16DORAInteractive assessments in this workstream
Onboarding and client relationships: trigger assessments for the service, use outcomes and reassess changes.
Learn before harm occurs
Six mistakes that can turn a sound product into a problematic client service
These examples show how failures can arise in onboarding, product governance and ongoing client relationships after the business has been classified.
Consider digital portfolio management: onboarding captures investment objectives and financial circumstances incompletely. A risky product is described too briefly, its target market may not fit and a distribution incentive influences selection. If clients incur losses, suitability, risk information and conflicts of interest may become contested. Whether a compensation claim arises depends on the facts of the case.
Risks described too vaguely
Sign: a notice says “losses are possible” without explaining leverage, liquidity or loss scenarios for the actual product.
Possible consequence: clients may decide without sufficient information; disclosures and potential claims can be disputed.
Review client information →Suitability built on missing data
Sign: objectives, knowledge, experience or financial capacity are not adequately gathered and considered in advice or portfolio management.
Possible consequence: recommendations or strategies may be unsuitable; cases and assessment processes may need review.
Explore suitability example →Appropriateness confused with suitability
Sign: a product quiz tests experience where a broader suitability assessment is required for the service, or an experience check is omitted where needed.
Possible consequence: the wrong questions create the wrong client journey and leave the decision poorly supported.
Explore client processes →Target market defined on paper only
Sign: a product reaches clients outside its defined target market because distribution and product approval are disconnected.
Possible consequence: distribution, product governance and individual cases may need review and correction.
Explore controls →Conflicts and incentives underestimated
Sign: commissions, kickbacks, discounts or internal targets influence product choice or messaging without proper conflict management.
Possible consequence: client interests may be impaired and, depending on the service, inducement rules may be breached. Portfolio management faces particularly strict limits on third-party benefits.
Review conflicts →Product promise and delivery diverge
Sign: marketing promises control or protection that the agreement, order logic, providers and documented operations do not deliver.
Possible consequence: complaints, corrections and investigations; serious or systemic breaches may lead to supervisory measures.
Review contracts →A mistake does not automatically create liability or a compensation claim. The applicable duty, specific breach, loss and causal link matter. Supervisory action likewise depends on the case.
Regulatory context for the examples (investment services): MiFID II · Art. 23 ↗MiFID II · Art. 24 ↗MiFID II · Art. 25 ↗ESMA · Product Governance ↗MiFID II · Art. 69 ↗
Did you know?
From the Pathfinder
Business concept
How an app can become an activity that requires permission.
Have you explored?
Across our tools & projects
Fit & Proper · skills matrix
Prepare management profiles and collective suitability reviews.
International market entry / Germany
Is Germany your next market?
Considering a local office, a branch or a standalone authorisation in Germany? The appropriate route depends on your home jurisdiction, activities and operating model. 3RMCN combines experience from complex supervisory projects with product, technology and delivery expertise: from entry strategy and key interfaces through to operational readiness.
Discuss your plans ↗Supervisory perspectives
Familiar with several regimes
Experience in the context of CySEC (Cyprus), MFSA (Malta), FCA (United Kingdom), the European ESMA framework and MAS (Singapore). ESMA is not a national licensing authority.
International structuring
Incorporating offshore?
For incorporation in offshore jurisdictions, relevant specialists from the network can be involved. Jurisdiction, activities and regulatory obligations need to be considered for each project.