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Enhanced Protection for Retail Investors in the Financial Sector in Belgium: Pre-Contractual Information Requirements and Risk Label

After the approval by Royal Decree of the Regulation of the Belgian Financial Services and Markets Authority (the "FSMA") banning the distribution of certain non-mainstream financial products to retail clients, two new legal measures confirm the trend towards increased protection for retail investors in the financial sector in Belgium.

A Royal Decree of 25 April 2014, published in the Belgian Official Gazette on 12 June 2014 (the "Royal Decree"), will reinforce the pre-contractual information requirements applicable to the distribution of financial products to retail clients in Belgium. A regulation of the FSMA, which was approved by Royal Decree on the same day, will require a standardized risk label to be assigned to financial products distributed to retail clients in Belgium (the "Regulation"). The Royal Decree and the Regulation will both enter into force on 12 June 2015.

The Royal Decree is characterized by its cross-sector nature: it applies to financial products such as savings accounts, cash certificates, life and non-life insurance agreements, securities and other investment products, with only a few exceptions. It introduces an obligation to provide a standardized information sheet to retail investors and, further, regulates the advertisement of financial products.

The Regulation sets out the technical requirements of the risk label and the classification that needs to be complied with when distributing financial products to retail investors.

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