FCA sticks by Mifid II 'complex product' guidelines

FCA sticks by Mifid II 'complex product' guidelines
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The FCA has issued clarification on whether investment trusts and other non-Ucits funds will be classified as non-complex under Mifid II after discrepancies appeared to emerge between the body and a European regulator.

In updated guidance issued today, the body said it intended to make no change to its understanding of the matter.

This comes after UK watchdog said last September the likes of investment trusts would not automatically be categorised as complicated types of fund structure for the purposes of the EU regulation.

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Esma, the European regulator, updated its guidance last month, leaving some regulatory consultants believing that all non-Ucits funds would be classed as such a complex product. This would mean that discretionary fund managers (DFMs) and advisers selecting these products for investors would be required to conduct additional appropriateness tests. 

The guidance issued by the FCA said its understanding of complex products did not necessarily include either investment trusts or other non-Ucits retail schemes (Nurs).

The FCA said the decision over whether such products would be designated as complex - and thus required additional questions to clients - should be made on a case-by-case basis.