Mifid II looks set to be delayed after the European Commission said technical challenges mean the measures may have to be pushed back by as much as a year.
Martin Merlin, a director in the Commission’s financial services department, told European Union lawmakers this morning (10 November) that the institution’s “preliminary view at technical level is indeed that a delay is needed’’ to the planned January 2017 start date.
“Maybe the simplest and most legally sound approach would be to delay the whole package for one year,’’ Mr Merlin said at a hearing of the EU parliament’s economic and monetary affairs committee.
In response to Mr Merlin’s comments about Mifid II, an FCA spokesman said it was for the Commission, the Council and European Parliament to make a decision on delaying the implementation of Mifid II, not national competent authorities.
He said: “Unless the co-legislators decide on a change, we can only continue to work to the deadline set in the level 1 text of 3 January 2017 for the obligations taking effect.”
Just last month the Financial Conduct Authority stated the implementation of the new EU Markets in Financial Instruments Directive into UK regulation will see a refocusing on inducements that could bias advice.
Speaking at the FCA’s Mifid II Conference, the regulator’s director of policy David Geale said the European Commission was likely to publish implementing regulation or towards the end of the year, covering many of the conduct issues.
Until this set of detailed requirements that firms will face is received, Mr Geale said the UK regulator could not consult on or finalise its policy approach in all areas.
But Mr Geale stated last month that firms should not simply sit back and wait.
One of the areas where the direction of travel is already known is that of tackling inducements, which he said will come under a new regime, banning all payments from third parties, apart from certain ‘minor non-monetary benefits’.
“For independent advisers, these new measures should feel similar to requirements we introduced in the UK through the RDR to address the risk of advice being biased by commissions – and, of course, our rules cover both independent and restricted advice,” noted Mr Geale.
As for appropriateness requirements under the new EU-wide rules, there will be an expansion of the types of products that are to be considered complex for investors to understand, the regulator stated.
Defining a product as ‘complex’ is important, as it means firms selling these products without advice will need to assess whether a potential purchaser has the necessary experience and knowledge to understand the product; the ‘appropriateness test’.
Also last month a study put the Markets in Financial Instruments Directive (Mifid) II rules at the top of investment managers’ regulatory concerns.
Research from Deloitte, conducted among 13 investment managers representing £475bn of assets under management, revealed all but one said Mifid II would have the greatest impact of all European regulations over the next two years.
emma.hughes@ft.com
