Reverse Solicitation in Luxembourg Private Banking: Evidence and Limits

Reverse solicitation, or the provision of a service at the client’s own exclusive initiative, describes a situation in which a client independently requests an investment service from a firm that has not solicited clients or potential clients in the relevant territory, nor promoted or advertised the service, whether directly or through an entity acting on its behalf or having close links with it. Where recognised by the applicable law, it may have the effect of disapplying a specific authorisation requirement or of the service not being regarded as provided in the relevant territory. It is not, however, a general cross-border authorisation or an automatic substitute for a passport, licence or other applicable market-access requirement.

The situation may be very practical. A client resident or established abroad spontaneously writes to a Luxembourg bank: “I would like to purchase this bond. Can you help me?”

May the bank provide the requested service merely because the client made the first contact? Not automatically. It must verify three elements: the applicable law and location of the service, the absence of earlier commercial activity and the precise scope of the request.

First control: in which direction is the service provided?

The European framework for investment services includes Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments, consolidated as at 6 June 2026 (the MiFID II Directive) and Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (MiFIR). The MiFID II Directive was transposed in Luxembourg notably through the Law of 30 May 2018 on markets in financial instruments and amendments to the Law of 5 April 1993 on the financial sector, as amended (the LFS). More specifically, as regards an investment service provided by a third-country firm at the client’s own exclusive initiative, Article 42 of the MiFID II Directive is reflected in Article 32-1(3) of the LFS. MiFIR, as an EU regulation, is directly applicable.

Four situations should be distinguished:

Situation	First rule to verify
Luxembourg bank serving a client in France or another European Economic Area State	First determine whether, under the law and territorial approach of the relevant State, the service is regarded as being provided in its territory. If so, verify that the relevant activities are covered by the bank’s passport and by the notification made to the Commission de Surveillance du Secteur Financier (the CSSF) under Article 34(1) of the LFS.
Luxembourg bank serving a client outside the European Economic Area	The EU passport does not apply. Assess the law of each jurisdiction in which the service may be regarded as being provided, including its territoriality and market-access rules and, where relevant, the effect given to the client’s initiative.
Third-country firm providing an investment service to a client in Luxembourg	Article 42 of the MiFID II Directive for retail clients and elective professional clients; Article 46(5) of MiFIR for per se professional clients and eligible counterparties. Irrespective of that classification, Article 32-1(3) of the LFS governs the provision in Luxembourg, at the client’s own exclusive initiative, of an investment service by a third-country firm.
Credit institution or foreign financial-sector professional from a third country referred to in Article 32(1) of the LFS, not established in Luxembourg, coming to Luxembourg occasionally and temporarily, notably to receive deposits or other repayable funds from the public or to provide any other service falling within the LFS	Article 32(5) of the LFS, which notably requires written authorisation from the CSSF.

This analysis is limited to investment services and activities. It does not extend reverse solicitation to deposits or other repayable funds from the public, lending or other services falling within the LFS. No general exemption arises for those services merely from the client’s own initiative.

The EU and Luxembourg rules concerning third-country firms directly govern services provided into the Union or Luxembourg. For a Luxembourg bank serving a client abroad, they provide useful benchmarks concerning client initiative and evidence but do not replace an assessment under the law of each relevant jurisdiction.

Article 42(1) of the MiFID II Directive and Article 32-1(3) of the LFS directly address the situation in which a third-country firm provides an investment service to a client established or situated in the Union at that client’s own exclusive initiative. They do not give a Luxembourg bank general permission to serve clients abroad.

Second control: what should the banker do upon receiving the message?

The relationship manager should not immediately send a brochure, product selection or commercial proposal. The relationship manager should:

1. retain the original message with its date and time;
2. identify the client’s country of residence or establishment and the location from which the request was made;
3. record the precise words used and the product or service requested;
4. check the internal country-by-country cross-border rules applicable to that jurisdiction and service;
5. search the bank’s systems for earlier communications, including marketing campaigns, calls, meetings involving solicitation, LinkedIn messages, events or introducer involvement;
6. refer the file to Legal or Compliance before any response containing an offer or recommendation.

In its answer of 25 May 2018 concerning the client’s own exclusive initiative, the European Securities and Markets Authority (ESMA) explains that the assessment must address the actual facts on a service-by-service basis. A signed client declaration cannot cure earlier commercial solicitation.

The bank must therefore be able to produce a complete chronology. According to ESMA, the firm should be able to provide records tracking the relationship with the client and, in particular, establishing who took the initiative. The bank should retain the original message and timestamp, customer-relationship-management records, marketing history, call logs, meeting notes, any intermediary involvement and the compliance approval.

CSSF Circular 19/716 as amended by CSSF Circular 20/743 (the Amended CSSF Circular 19/716) applies directly to third-country firms providing investment services in Luxembourg. Part III, numbered pages 11/22 and 12/22, requires the firm to document and retain its territorial analysis. Separately, it requires reverse solicitation to be assessed for each service and on a continuous basis. A concrete assessment based on the facts of each file also follows from the ESMA Q&A.

Three operational examples

Defensible situation, subject to the applicable law

The client independently sends an email requesting the purchase of a specifically identified bond. The bank’s systems show no earlier campaign, call or meeting involving solicitation. Legal or Compliance confirms that the law of each relevant jurisdiction permits the bank to respond.

Indefensible situation

The banker sent a bond presentation, presented or promoted the relevant product to the client during a commercial event, or asked an intermediary to contact the client. The client then responds with an investment request. That response does not transform the original solicitation into reverse solicitation.

Situation requiring clarification

The client was introduced by an intermediary. The bank must establish for whom the intermediary acted, who arranged the contact and whether commercial activity had previously been undertaken on the bank’s behalf.

Third control: how far may the bank go after the request?

The response must remain limited to the client’s request.

Article 32-1(3) of the LFS provides that the client’s initiative does not entitle a third-country firm to market new categories of investment products or services. Article 42(2) of the MiFID II Directive provides that new categories may not be marketed otherwise than through the branch where a branch is required under national law.

Those provisions directly govern a third-country firm providing a service into the Union or Luxembourg. For a Luxembourg bank serving a client abroad, the limits of its response and subsequent approaches arise under the law of each relevant jurisdiction. The same logic remains operationally prudent: a one-off request should not be treated as permanent permission without verifying the applicable law.

In its answer of 28 March 2019, ESMA explains that a third-country firm may present another product within the same category during the transaction in progress. It may not market such a product at a later stage without a new client initiative, unless this is done through a branch where national law requires one.

In practice, after the transaction, the bank should:

• record the product and service covered by the request;
• disable automated campaigns that are incompatible with the applicable regime;
• subject any extension of the relationship to a new cross-border review;
• document each new spontaneous request separately.

For a Luxembourg bank serving a client abroad, a request to purchase a bond should therefore not be treated, without verifying the applicable law, as permitting the bank to market a fund, structured product, portfolio-management mandate or even another bond one month later.

The operational rule is concise: identify the service concerned, verify the law of each relevant jurisdiction, retain the complete chronology and never turn a one-off request into permanent permission.

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References:

• Directive 2014/65/EU on markets in financial instruments — consolidated as at 6 June 2026
• Directive 2014/65/EU, Article 42 — services provided at the client’s own exclusive initiative
• Regulation (EU) No 600/2014, Article 46(5) — initiative of a per se professional client or eligible counterparty
• Law of 5 April 1993 on the financial sector, as amended — Articles 32(5), 32-1(3) and 34(1)
• ESMA, MiFID II and MiFIR Q&A, Chapter 13, Question 1, answer of 25 May 2018 — client’s own exclusive initiative
• ESMA, MiFID II and MiFIR Q&A, Chapter 13, Question 2, answer of 25 May 2018 — product categories and records
• ESMA, MiFID II and MiFIR Q&A, Chapter 13, Question 4, answer of 28 March 2019 — limits of a one-off service
• CSSF Circular 19/716 as amended by CSSF Circular 20/743, Part III, numbered pages 11/22 and 12/22