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CSSF finds weaknesses in IFM’s marketing communications under CBDF Regulation and ESMA Guidelines and recommends corrective measures

The CSSF conducted a thematic review on marketing communications by Luxembourg IFMs under the CBDF Regulation and the ESMA Guidelines and published its results on 23 August 2023. The review found a number of weaknesses. The CSSF asks IFMs to consider these general findings and observations and to take the necessary corrective measures where needed.

On 23 August 2023, the CSSF published the results of its thematic review on marketing communications under Regulation 2019/1156 on facilitating cross-border distribution of collective investment undertakings (the CBDF Regulation), which covers the period from 1 April 2021 to 31 March 2023.

The CSSF launched the review in 2022, following Article 8 of the CBDF Regulation, which requires national competent authorities to report to ESMA every two years on the application of the rules based on ex-ante and expost verifications of marketing communications. The review reveals several areas of weakness or improvement in the content and use of marketing communications by Luxembourg investment fund managers (IFMs) under Article 4 of the CBDF Regulation and the ESMA Guidelines on marketing communications on cross-border distribution of funds (the ESMA Guidelines). 

The CSSF reminds IFMs that they are responsible for complying with Article 4 of the CBDF Regulation, irrespective of the actual entity marketing the fund, and of the relationship it has with the third-party distributor. The CSSF also asks IFMs to consider its findings when reviewing their procedures, establishing new marketing communications and/or verifying the consistency of existing ones and to take the necessary corrective measures.

The CSSF made the following recommendations to IFMs to address the following points:

1. Lack of identification of marketing communications1

Marketing communications did not always clearly show that they were marketing communications, as they only mentioned their commercial nature in a disclaimer at the end of the document among other information or not at all. The CSSF expects that the terms “marketing communication” be prominently disclosed on all marketing materials, regardless of the medium used (eg website or social media platform).

2. Inconsistency of marketing communications with fund’s documents2

Marketing communications must be consistent with the fund’s legal and regulatory documents, such as the prospectus, the KID, the financial statements and with the SFDR website disclosures of their IFMs. The CSSF found that many marketing communications did not meet this requirement, in particular regarding the description of the features of the investments which was either not in line with the fund’s documents or insufficient (eg leverage, eligible assets, holding period, etc). The CSSF expects IFMs to use consistent wording and indicators across fund’s documents, without contradicting, exaggerating or diminishing the significance of any information in them. 

3. Suitability of marketing communications for the target or potential investors3

Marketing communications were not always fair, clear and not misleading, nor were they adapted to the targeted investors (eg retail investors). Sometimes legal information was included in disclaimers that were in small text, long paragraphs, or using complex words and indicators. The CSSF expects that marketing communications use simple and clear language, explain all acronyms and terms describing the investment and make notes or disclaimers easy to find and to read. The CSSF also recommends to state clearly the type of investors targeted, in particular when marketing communications target only one type of investor, but the fund/sub-fund is open to both retail and professional investors. Finally, marketing communications should give enough details about label, certification, or ratings they display, including the year it was given, the entity that granted it and a hyperlink to a website where further information can be found. The CSSF reminds IFMs to use hyperlinks sparingly4 and to make sure they work and lead directly to the relevant information.

4. Insufficient information or absence of information on availability of fund’s documents5

Marketing communications of funds publishing a prospectus or a KID must indicate that these documents exist and how, where and in which language they can be obtained, with hyperlinks or websites addresses. UCITS marketing communications must also indicate how and where to get a summary of investor rights, with a hyperlink, and that the fund or its IFM can terminate arrangements made for the fund’s marketing. Certain marketing communications did not comply with these requirements or did so only partially. The CSSF expects that marketing communications include this information, unless the communication channel is too limited or unsuitable (eg social media, banners, etc). In that case, they should clearly and prominently direct investors to a website or another easily accessible source for the information.

5. Insufficient and too generic information on risks6

Marketing communications must identify and describe the risks and rewards of investing in a fund in a balanced and consistent way and indicate where to find more details on risks. The CSSF found that certain marketing communications were inconsistent with the fund’s documents or did not mention where to find complete information on risks. The CSSF expects that sections on risks be specific to the fund/sub-fund promoted and always disclose where to find complete information on risks, even for professional investors.

6. Inconsistent or incomplete information on costs7

Marketing communications must explain how costs affect the investment and the expected returns and be consistent with the fund’s documents. Certain marketing communications did not present information on costs properly, and gave incomplete information on costs. The CSSF expects that, when disclosing information on costs, the marketing communication includes the periodicity of these costs and clearly indicates that not all costs are presented. Investors should be directed to the prospectus or equivalent for further details on costs.

7. Incorrect display of past performance and insufficient or unclear information on benchmarks8

The CSSF observed certain common issues of non-compliance with the ESMA Guidelines on past performance and benchmarks such as:

  • using incorrect reference periods (which should be ten or five years);
  • showing current-year performance at the most recent month-end instead of quarter-end;
  • showing performance for new funds based on a related group strategy or equivalent while in such case only performance of a benchmark or objective return referred to in the fund documents may be displayed;
  • displaying performance for funds resulting from a merger or a contribution in kind without proper disclosure of when these events occurred in the data shown; and
  • providing insufficient or unclear information on the use or not of a benchmark and the degree of freedom from it.

The CSSF expects IFMs to enhance transparency on the use of benchmarks, notably respect the periodicity criteria and the consistency with the fund’s documents and clearly disclose any significant changes affecting past performance.

Certain marketing communications had a hyperlink to general sustainability-related information (not for the specific fund/sub-fund promoted) or only focused on sustainability-related aspects. The CSSF expects that the marketing communication includes a hyperlink where information on sustainability-related aspects is provided in relation to the promoted fund, and that this information does not outweigh the extent to which the investment strategy of the fund integrates sustainability-related characteristics or objectives.

Short marketing communications, such as social media posts, should be neutral and include a link to the fund’s information documents. The CSSF found, in very rare instances, non-neutral marketing communications or hyperlinks that directed to the IFM’s homepage. The CSSF reminds IFMs that the hyperlink must directly lead to the page where the fund’s documents are available.

For further information on the topic, please reach out to your usual A&O contact.


  1. Article 4(1) of the CBDF Regulation and point 6 of the ESMA Guidelines
  2. Article 4(2), (4) and (5) of the CBDF Regulation and point 18 of the ESMA Guidelines
  3. Point 16 of the ESMA Guidelines
  4. In accordance with point 28 of the ESMA Supervisory Briefing on sustainability risks and disclosures (ESMA 34-45-1427)
  5. Articles 4(2), 4(3) and 4(5) of the CBDF Regulation
  6. Section 6.3 of the ESMA Guidelines
  7. Section 6.3 of the ESMA Guidelines
  8. Article 4(1) of the CBDF Regulation and Sections 5 and 6.2 of the ESMA Guidelines
  9. Section 6.5 of the ESMA Guidelines
  10. Point 31 of the ESMA Guidelines