Industry to work together over new MiFID product rules

Industry to work together over new MiFID product rules

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 need to identify a potential target market and the 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.

Mr Mushens said: “With millions of data sets flying backwards and forwards, it would be ridiculous if they weren’t in a standardised format.”

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.

An Old Mutual Wealth spokesman confirmed 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”.

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.

An FCA spokesperson said it would be consulting on its implementation of Mifid II in due course.

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 decided to de-register because it was putting our capital adequacy up massively.”