Is a MiFID investment firm allowed to advertise that it is covered by the Investor Compensation Scheme?

• A. No, it may not advertise
• B. Yes, it may advertise
• C. Only to clients
• D. Only with authorization

Answer: (A)

Under MiFID, marketing communications from an investment firm must be fair, clear, and not misleading about any protections. Claiming that the firm is “covered by” an Investor Compensation Scheme can give a false impression of a guaranteed level of protection or of blanket coverage for all investments. The actual scope, eligibility, and limits of such schemes vary by jurisdiction and by product, and firms are not permitted to imply protections that aren’t accurate. Because this kind of claim could mislead clients about the safety of their funds, it is not allowed to advertise that the firm is covered by the Investor Compensation Scheme.