Protections for savers in Monaco

2019 02 18 protection invest

Protecting clients is at the heart of the work of all banking and financial regulators.

With respect to protecting clients in the banking sector, regulations set by neighbouring France to protect banking and insurance product clients (controlled by the DCPC) do not apply in Monaco.

As for finance and protections for savers, it is hard to even keep track of European initiatives and regulations. Simply listing the following acronyms or texts - the MIFID 2 Directive and its MIFIR Regulation, the PRIIPs Regulation, the OPCVM Directive, the Prospectus Directive, the Deposit Guarantee Schemes Directive, the Capital Markets Union (CMU) EU action, the proposal for a Pan-European Pension Product (PEPP) - should give the reader some idea of how central the protection of financial investors (who are recognised by the law as consumers) has become for policy-makers in the EU, and beyond.

The Principality of Monaco is no exception. It is an active player in this massive drive to provide effective protection for savers.

In Act 1338 of 7 September 2007 on Financial Activities, Monaco has aimed to place the protection of savers at the centre of its legislation. The best practice rules set out in the Act translate into:

  • an exclusive commitment to the interests of clients
  • a duty of advice and information
  • assessments of investor knowledge and skills
  • preventing conflicts of interest

amongst other actions. These are mostly inspired by the principles enshrined in the MIFID 1 Directive, which has been enhanced by MIFID 2.

While the Act relating to Financial Activities does not formally distinguish between different categories of investor (unlike MIFID 1 and 2), Act 1339 of 7 September 2007 relating to Mutual Funds only allows well-informed investors, those with the experience required to assess the merits, risks and liquidity of financial investments, to invest in an investment fund.[1] The term ‘investor’ refers, in a way, to professional investors as defined by MIFID 1 and 2.

Case law in Monaco, without ever turning its back on the distinctive features of local law, has kept up with ongoing developments in neighbouring France in this area. This is particularly true of the search for the right balance between protecting the weaker party - the investor - and the legitimate concern to protect the legal security of contracts agreed between professionals.

This concern is also addressed in several subsequent texts which are more or less directly aimed at financial services. In this way, Act 1401 of 5 December 2013 makes a distinction between individuals and professionals in terms of providing goods or services. [2] A reduced limitations period of two years applies to actions of professionals dealing with private individuals. Furthermore, the court may lift this limitations period, in the interest of public order, in any suit involving a professional and a private individual[3].



[1]Article 47 of Ordinance 1285 of 10 September 2007.
[2] Article 2048 of the Civil Code
[3] Article 2069 of the Civil Code