Your IndustryAug 5 2016

Mifid II regulation still full of unknowns

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Mifid II regulation still full of unknowns

Mifid II’s legislative effect on UK firms is still a great “unknown” and the industry faces a big challenge over this, the chief executive of the Wealth Management Association has said.

In a video interview with Investment Adviser’s Eleanor Duncan, Liz Field said while the implementation of Mifid II had been pushed back, there were still problems to be overcome.

“We have been working closely with our member firms, with the Treasury and the FCA and with all the European counterparties who have been developing and writing the text to make sure there is a Bible for our firms,” she stated.

“This would be outlining each component, whether this is best execution, costs and charges, transaction reporting, the whole gambit - but some of it won’t be known for a while until the Level Three text comes out.

“Until then, firms cannot get on with two key things: technology and the systems changes that are required.

“Plus there are a lot of third-party dependencies, which are just as much in the dark as our member firms.”

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But there were other challenges facing members, not just Mifid II. Ms Field summed the main concerns into four: regulation, technology, clients and staff.

She said: “The main issue with regulation is not just that Mifid II is coming in, but also we have to cope with constrained timeframes of a number of pieces of legislation.

“So for example, we have Prips, due at the end of the year; the Market Abuse Directive and regulation which is coming in; the Anti-Money Laundering Directive which is coming into force in June next year; the Senior Managers’ Regime in 2018; and we still don’t know the outcomes of the Financial Advice Market Review.”

In relation to clients, she said members wanted to know how to attract them. In June, the WMA held a Millennial Forum which discussed how to engage future clients and use technology to do that.

“How do we communicate with clients about either market uncertainty or the regulatory changes that require us to communicate with them in a different way?”, Ms Field asked.

Technology would be key to engaging with existing, future and millennial clients, which Ms Field said would increase firms’ business tenfold.

However, she noted while firms are spending so much money on coping with regulatory change, there was a “real conflict” in terms of being able to free up enough money to invest in technology.

Moreover, a risk survey done among WMA member firms last year found the third biggest area of concern for wealth managers was how to recruit, train and retain staff.

Ms Field added: “How do we give them the knowledge to cope with all the required changes in the landscape?”

simoney.kyriakou@ft.com