Director of Augé Grup’s Legal Department Joan Miró answers:
First of all, preference shares can be defined as a high-risk complex financial instrument; as they are not covered by guarantee funds and are traded on the secondary financial market.
However, bank entities are required to take appropriate measures to protect the interests of customers and their savings that do not pass relevance test (test d’idoneïtat).
In this regard, a special mention must be made in the declaration 7/EFI-AFI INAF, ethical rules must be respected by the authorized entities operating in the Andorran financial system. Some of these can be mentioned:
– All persons and entities must act in an impartial manner and without breaching the rules of conduct specified in this declaration. The legitimate interests of clients are the priority. Institutions shall not conduct operations solely for the purpose of receiving commissions.
– Edit reports on clients’ financial situation (guarantees, liquidity, etc.)
– Inform the client about the actual risk of the services offered.
– Accurately execute client orders in financial markets.
We can refer to the jurisprudence, the decision STSJA of 29 May 2015 states that the relationship of trust between the bank and the consumer is based on “regular information on management, especially when there is a risk of loss, Risky operations require more information.”
The right to information and the transparency of the banking system is essential to the smooth functioning of the banking services market.
In the case of preference shares the capital is not guaranteed, however, the investor must be informed in writing about the exposure to the risk of issuing the securities, the risk inherent in the transactions related to financial derivatives in Outside the regulated market. Thus, the investor should be informed that in certain circumstances he may lose some or all of his investments.
It is precisely this type of product that is covered by the MiFID (Markets in Financial Instruments Directive), European Directive 2004/39 / EC of the European Parliament of 21 April 2004. The transposition of this Directive will give rise to a (Llei 14/2010 of 13 May) on the legal regime of banking entities and the administrative regime of the operational entities of the financial system. In Andorra, the Andorran National Institute of Finances (INAF) is responsible for coordination and communication.