Sustainability Preferences in the Suitability Test: What the AMF Found When It Inspected Five Firms

In February 2026, France's Autorité des Marchés Financiers (AMF) published the results of a series of SPOT inspections examining how investment firms integrate sustainability preferences into the client journey. Five investment services providers authorised to provide investment advice were inspected.

The headline finding: none of the five firms complied with the regulatory requirements at the time they came into application.

The obligations in question stem from Delegated Regulation (EU) 2021/1253, which amended the MiFID II framework by requiring that client sustainability preferences be taken into account in the suitability assessment from 2 August 2022. These are the same rules that apply to Cyprus Investment Firms under the same delegated regulation.

This article examines the key findings, the good and poor practices identified, and what the inspection results signal for firms across the EU.

1. What Was Inspected

The AMF reviewed four areas of the suitability process as it relates to sustainability preferences:

The involvement of the compliance function in managing the project to integrate sustainability preferences, including the training of advisors.

The identification of financial instruments with sustainability characteristics, including the criteria used for classification and the updating of product governance arrangements.

The scope and methods for collecting client sustainability preferences, including how clients were informed and how questionnaires were structured.

The implementation of the suitability test from the perspective of sustainability preferences, including how matching was performed and what was recorded in the suitability report.

2. Compliance Function and Training

Most of the compliance work at the inspected firms began in 2021, before the regulation came into application in August 2022. Despite this head start, the AMF noted significant delays in rolling out compliant systems. Institutions cited the complexity of the regulations, the updating of the ESMA guidelines in April 2023, and the difficulty of gathering reliable information about financial instruments from producers.

Four out of five firms were late in formalising the new requirements in their procedures. Four out of five had not updated their control plans to include first- or second-level checks on sustainability preferences in the suitability process.

On training, the AMF found no regulatory breaches. All firms had made training mandatory for advisors. However, the report noted that training quality varied, and one firm had made variable remuneration for advisors conditional on attending sustainable finance training courses.

What this means in practice: The compliance function needs to be involved at every stage of the integration, not just in drafting the policy. Procedures must be updated before the system goes live, not after. And the control plan must be updated to include checks that are specific to sustainability preferences.

3. Identifying Financial Instruments with Sustainability Characteristics

Four of the five firms identified sustainability characteristics according to the three regulatory criteria: the proportion aligned with the EU Taxonomy, the proportion qualifying as sustainable investments under SFDR, and principal adverse impacts (PAIs). One firm used a label-based approach instead, which the AMF noted would constitute a regulatory breach if it could not be mapped back to the three criteria.

Taxonomy alignment percentages were generally lower than SFDR percentages across the firms inspected. One firm offered no financial instruments that met the Taxonomy criteria at all. The AMF attributed this partly to the rigour of the Taxonomy's methodological requirements and partly to the limited availability of qualifying products from producers.

On product governance, the AMF found that all five firms used the target markets defined by producers for sustainability characteristics without defining their own actual target market. Three firms did not regularly review the financial instruments they marketed to ensure continued alignment with the defined target market for sustainability preferences.

What this means in practice: Distributors cannot simply adopt the producer's target market for sustainability characteristics without assessing it against their own client base. The product governance obligation requires distributors to define their own target market. And the sustainability characteristics of the product range must be reviewed on a regular basis.

4. Collecting Client Sustainability Preferences

The proportion of clients who expressed sustainability preferences varied significantly: around 15% at two firms and 50% at two others. The AMF found that the difference was likely linked to the role of the advisor in encouraging clients to express preferences, rather than to differences in the systems themselves.

A striking finding: between 0.5% and 4% of clients expressed detailed sustainability preferences (i.e., specifying minimum proportions for Taxonomy, SFDR, or PAIs). There was no correlation between the proportion of clients who expressed any preference and those who went into detail.

Three firms had started collecting sustainability preferences late, despite having systems in place. One firm collected preferences while informing clients that recommendations would be tailored to those preferences, even though the choices were not actually taken into account in the suitability assessment. The AMF found this to be a breach of the obligation to provide accurate, clear, and not misleading information.

On the structure of questionnaires, the AMF identified several issues with how detailed preferences were collected. Three firms used qualitative thresholds (e.g., "low", "medium", "high") without associating them with numerical values or offering sufficient granularity. None of the five firms allowed clients to express a minimum alignment proportion higher than the maximum percentage offered by the institution.

What this means in practice: The way the questionnaire is designed matters. If the preference collection uses vague qualitative thresholds without numerical values, clients cannot meaningfully express their preferences. And if the range of options is capped at whatever the firm happens to offer, the collection is not neutral. The ESMA guidelines require a neutral and unbiased approach.

5. The Suitability Test Itself

Three firms used an automated tool to match sustainability preferences with instrument characteristics. Two used a manual process. The AMF found fewer cases of non-suitability among firms with automated systems.

One firm did not collect the proportion of the portfolio that the client wished to invest in sustainable instruments, despite using a portfolio-level approach to the suitability assessment. This was found to be a breach of Article 54(2)(a) of Delegated Regulation (EU) 2017/565.

When no financial instrument matched the client's preferences, three firms did not invite the client to review their sustainability preferences. Instead, the suitability reports contained a generic statement saying the firm was unable to meet the preferences and that the client had agreed to change them. The AMF found this to be a regulatory breach.

One firm provided a personalised recommendation to a client whose detailed preferences could not be matched and who did not want to adapt them. The advice was given anyway.

Across all five firms, the suitability reports contained anomalies. Four firms did not mention generic preferences in the report. One firm made no reference to sustainability preferences at all. None of the firms included the adaptation process, the client's response, or the new preferences expressed by the client in the suitability report, as required by the ESMA guidelines.

What this means in practice: The suitability report is the final record of whether the process worked. If it does not reflect the preferences expressed, the adaptation offered, and the client's response, the entire chain from collection to recommendation is untraceable. Automated matching reduces errors, but the report itself must capture the full picture.

6. Good Practices Identified

The AMF also identified a number of good practices across the panel:

Training: Making variable remuneration conditional on attending sustainable finance training. Encouraging advisors to take the AMF Sustainable Finance certification.

Product governance: Introducing an internal rating system for financial instruments to cross-check against producer classifications. Developing a dedicated sustainable product range for clients with the strongest preferences.

Preference collection: Using a tree-structure questionnaire that adapts the number of questions to the client's level of interest. Setting up an IT block that prevents advice from being given until preferences are collected. Collecting preferences per account rather than per client, allowing for different levels of interest across accounts.

Suitability assessment: Using automated matching tools. Adopting a cumulative approach to PAIs (requiring all selected PAIs to be present in each recommended instrument). Setting up an IT block to prevent advice when preferences cannot be matched and the client does not wish to adapt.

7. What This Means for Cyprus Investment Firms

The obligations examined in this inspection apply identically to Cyprus Investment Firms. Delegated Regulation (EU) 2021/1253 applies across the EU. The ESMA guidelines referenced throughout the AMF's findings (ESMA35-43-3172) are the same guidelines that CySEC-regulated firms are expected to follow.

The AMF's inspection provides a detailed, practical roadmap of what a supervisor looks for when it examines the integration of sustainability preferences into the suitability process. It also provides a clear list of what constitutes a regulatory breach, and what constitutes good practice.

Firms that have not yet updated their procedures, control plans, and suitability reports to reflect sustainability preferences should treat this report as a priority reference.

Source: AMF, Summary of SPOT inspections on the consideration of sustainability preferences in the client journey, February 2026.

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Assessment of Suitability: Fundamentals and Practical Implementation