The Tax Incentivised Savings Association has called for greater clarity and understanding around appropriateness and product governance in the Markets in Financial Instruments Directive II, forming two working groups in the process.
This comes ahead of the Financial Conduct Authority conference and consultation paper on the subject in October, followed in December by the expected publication of the way it plans to implement the EU rules in the UK.
At an open forum held by Tisa yesterday (29 July), it was agreed to form two working groups to tackle these key issues and engage with the FCA to develop good practice industry guidelines.
Tisa said that now Mifid II is in implementation phase, it believes this is a good opportunity for the industry to consider what good practice could or should look like.
This includes the definition of complex versus non-complex products, what best practice looks like for product governance, information flows between the manufacturer and distributor, how technology can be used and what the impact will be on clients, amongst other things.
Jeffrey Mushens, Tisa’s technical director, said he was pleased with the support and responses received from across the industry on the central issues in Mifid II - appropriateness and product governance.
“This clearly demonstrates why it is so important to discuss the implications for the industry and to engage with the FCA, which will be writing and implementing the rules around these issues.”
Mr Mushens said that for many, it has been a “wake-up call” and a “recognition that Mifid II will have significant impact on their business”.
He continued that the directive makes it very clear that firms which manufacture or distribute a product will be expected to have appropriate organisational arrangements that specifically address governance.
“Whilst there has always been a requirement to understand the products under advice, this is not required to be more organised and formal, thus, the directive increases expectations on existing systems and controls.”
Mr Mushens added that Tisa sees a window of opportunity to influence regulatory thinking and develop standards for the industry.
ruth.gillbe@ft.com
