ESMA Guideline 1 (2016/574) requires professionals to provide a detailed cost breakdown, including administration fees, transaction fees, and any early exit penalties. For example, for an interest rate swap sold with a variable-rate loan, the client must understand not only the immediate cost but also the risks associated with interest rate fluctuations.

Article 25(2) of MiFID II stipulates that when investment advice recommends a package, the suitability assessment must cover the package as a whole and not only each component in isolation. This ensures that the client fully understands the overall product they are purchasing. For example, a preferential-rate savings account offered with a structured bond must be assessed as a whole.

ESMA Guideline 1 requires the detailed cost breakdown to include all fees, such as administration fees, transaction fees, and any early exit penalties. For example, for an interest rate swap sold with a variable-rate loan, these fees must be clearly presented to the client so they can understand the total cost and potential risks.

ESMA Guideline 5 requires the professional to explicitly explain how the overall risk profile is affected by purchasing the package rather than the components separately. For example, if a preferential-rate savings account is offered with an unguaranteed structured bond, the overall risk profile is modified because the savings account capital is guaranteed while the structured bond capital is not.

In accordance with ESMA requirements, subscription forms must not contain pre-ticked boxes imposing the purchase of the package. This ensures that the client has the option to acquire the components separately if possible. For example, a preferential-rate savings account offered with a structured bond must be presented in a way that does not give the impression that the bundled purchase is mandatory.

ESMA requires that the presentation of bundled offers must not give the impression that the bundled purchase is mandatory. This means the client must clearly understand that they can, where possible, acquire the components separately. For example, a professional must ensure that subscription forms do not contain pre-ticked boxes imposing the purchase of the package.

Bundled and tied offers have distinct characteristics. For a bundled offer, each component remains available separately. For a tied offer, at least one element is only accessible within the package. For example, an interest rate swap sold with a variable-rate loan could be a tied offer if the swap is not available on its own.

Article 24(11) of MiFID II distinguishes bundled offers, where each component remains available separately, from tied offers where at least one element is only accessible within the package. This distinction is crucial because it determines the applicable obligations for professionals. For example, an interest rate swap sold with a variable-rate loan must be assessed considering both the immediate costs and potential risks, such as early exit fees.