Investor Protection
Whether you’re a first-time investor or an experienced portfolio holder, financial regulation exists to ensure that your money is managed responsibly, transparently, and with your best interests in mind. In Luxembourg’s financial centre, investor protection is a top priority—anchored by robust European and national regulations.
MiFID: Personalised Investment Advice and Protection
MiFID (Markets in Financial Instruments Directive) is a cornerstone of European investor protection. It ensures that banks and investment firms offer you products and advice tailored not only to your financial situation, but increasingly also to your values and sustainability preferences.
Launched in 2007 and significantly reinforced with MiFID II in 2018, the regulation places you at the centre of investment decisions. It mandates:
- Clear product transparency: You receive accessible, tailored information on risks, performance, and fees.
- Personalised advice: Every recommendation must be justified and aligned with yourinvestor profile.
- Recorded communication: Calls and emails related to your investments are securely recorded and made available to you on request.
Your Investor Profile: Now with a Sustainability Lens
Before offering advice or executing an order, your bank must define your investor profile, which includes:
- Your financial objectives and investment horizon.
- Your tolerance for risk and ability to bear losses.
- Your investment knowledge and experience.
- Your sustainability preferences, if any.
Since August 2022, under new EU rules implementing MiFID’s sustainability dimension, your bank must also ask whether you wish your investments to consider:
- Environmental, social, or governance (ESG)
- Investments aligned with theEU Taxonomy for sustainable activities.
- Financial products that promote sustainability objectives or reduce negative impacts.
This ensures that the investment solutions offered are not only financially suitable—but also aligned with your ethical values and long-term impact goals.
FGDL: Guaranteeing Your Bank Deposits
In addition to MiFID protections, Luxembourg protects depositors through the Fonds de garantie des dépôts Luxembourg (FGDL).
- The FGDL guarantees your bank deposits up to €100,000 per person, per institution.
- This applies to savings accounts, current accounts, and term deposits.
- In the rare event of a bank default, this coverage ensures you recover your funds within a short period.
The FGDL applies automatically—you don’t need to take any action to be protected.
SIIL: Safeguarding Your Investment Instruments
The Système d’indemnisation des investisseurs Luxembourg (SIIL) provides additional protection by covering investment instruments if your bank or investment firm is unable to return assets due to financial failure.
- Coverage is up to €20,000 per person, per institution.
- Applies to stocks, bonds, funds, and other financial instruments held in custody.
- Protects against fraud, mismanagement, or insolvency of your intermediary—not against market losses.
Together, MiFID, FGDL, and SIIL form a comprehensive protection framework for investors in Luxembourg, safeguarding both your assets and your peace of mind.
