Fund groups, platforms and intermediaries are collaborating to reduce the burden of new Mifid II product rules announced earlier this month.
Published by the European Commission on 7 April, they require distributors, including advisers, to pass information to providers to ensure investment products are being sold only to specifically targeted markets when Mifid II comes into effect in January 2018.
For each product, investment firms will need to identify a potential target market and type of client whose needs, characteristics and objectives it will meet.
If the product provider requires information on product sales to comply with the rules, distributors will have to offer it up.
Jeffrey Mushens, technical director at Tisa, which is coordinating united efforts to prepare for the incoming rules, said a standardised way for advisers to send information to providers could be in place by the end of the year.
He said: “With millions of data sets flying back and forward it would be ridiculous if they weren’t in a standardised format.
“The new responsibilities on distributors are proving challenging because we have never had to do it before and we want to ensure the burdens are kept to a minimum.
“It has taken a bit more time to get distributors involved but we have now got platforms as well as more classic intermediaries.”
The Tisa working group of representatives from fund managers, intermediaries and platforms, is in talks with companies to provide a way of relaying this information, he said.
Several major fund houses are poised to collaborate on an industry-wide response to the new rules.
An Aberdeen Asset Management spokesman said it will work on the definition of target market “to ensure a coordinated response to the new regulation”.
A spokesman for Jupiter Asset Management said it backed an industry “good practice framework” for target markets and the information providers will need to obtain from distributors.
A spokesman for Old Mutual Wealth said platforms will play an “important role” in implementing Mifid II. It is collaborating with fund groups and other platforms on a “practical and efficient industry-standard approach” to the rules.
However a Schroders spokesperson said “at this stage we don’t see [the Mifid II rules] as requiring fundamental change to our business model”.
Under the rules, if providers find their products are not being sold as intended, they must either contact the adviser to change the distribution process, terminate the relationship with the distributor or inform the FCA.
A spokesman for the Investment Association said standardised information sharing between distributors and product providers will “re-codify” the FCA’s treating clients fairly guidance, and further harmonise the Europe-wide consumer protection.
The FCA will be consulting on its implementation of Mifid II “in due course”, a spokesperson said.
Adviser view
Colin Parkin, managing director of Lincolnshire-based Ample Financial Services, said: “From our point of view we looked at Mifid II completely and we decided to deregister completely [????] because it was putting our capital adequacy up massively.”
