France’s Financial Markets Authority (AMF) has published findings from thematic inspections of four investment services providers, identifying numerous breaches in client communications concerning real estate investment companies (SCPI). The review covered January 2022 through the first quarter of 2026, principally examining investments outside life insurance. It assessed how distributors responded to the deterioration in the SCPI market from the second half of 2023, including falling unit values and difficulties meeting withdrawal requests. All four providers failed to give clients complete information on the nature and risks of SCPI before providing investment advice. Generic warnings about low liquidity did not adequately explain actual exit constraints, potential delays or falling withdrawal values. Distributors relied excessively on documents supplied by asset managers without sufficiently checking their content or keeping them current. Suitability reports across the sample were too standardized and gave little or no explanation of why particular investments remained suitable despite deteriorating conditions. At two firms, some recommendations involving borrowing to purchase units lacked explanations of the associated financing risks, which had not been communicated elsewhere. Product governance and internal controls also failed to respond consistently to changing risks. Some firms lacked documented triggers for reviewing their offering or did not adequately reassess target markets and distribution strategies. Keeping a product available was not itself a failing, but required a documented assessment of its continued suitability for the target market. Controls often checked procedural compliance without adequately testing the substance of advice or disclosures. These shortcomings echo the weaknesses in product monitoring and personalized recommendations identified in the broader joint AMF and Prudential Supervision and Resolution Authority review of around 60 inspections conducted between 2020 and 2024. Compliance improvements accelerated following the SCPI inspections.
France’s Financial Markets Authority identifies disclosure and advice failings at four SCPI distributors
France’s Financial Markets Authority found numerous disclosure and advice breaches in thematic inspections of four SCPI distributors. All four provided incomplete risk information before advice, while suitability reports inadequately explained why investments remained appropriate despite falling values and withdrawal difficulties. Weaknesses in product reviews and internal controls echoed findings from the authorities’ broader review of retail distribution.