Mifid II  

Guide to Mifid II implementation

  • To understand the rule changes coming in with Mifid II.
  • To be able to list what impact Mifid II might have on investment advice and platforms.
  • To learn what suitability measures will need to be implemented.
CPD
Approx.60min
Guide to Mifid II implementation

Introduction

Directive 2014/65/EU doesn’t sound very catchy but this is the official designation of the Markets in Financial Instruments Directive II legislation which is coming into force in just a few weeks' time. 

While firms across the European Union have had years to consult on, respond to, and consider how to implement the rules, which come into force on 3 January 2018, many smaller firms are only now starting to find out what particular rules will affect their business.

Within the main document, and its various annexes and additional chapters, the directive sets out courses of action to improve product information, transparency, fee disclosure, unbundle research and tighten up investor protection.

While most of these laws will apply just to fund managers – producers of funds – they also have significant implications for distributors, which can be anyone from fund platforms, discretionary wealth managers, multi-asset funds, asset allocators, fund buyers, investment advisers and financial advisers.

As Parmenion has pointed out in a recent newsletter, although financial advice firms who do not hold client money are classed as Article 3 firms under Mifid II, and therefore are exempt, this does not mean the new rules will not affect the way they operate after January 2018.

Not only is the FCA implementing Mifid II more widely, and is making changes to its Conduct of Business rules accordingly, there will be a greater burden on advisers to ensure better information, appropriate fund recommendation and articulate costs and charges better to clients. 

This guide focuses on just a few of the many issues raised by Mifid II, which relate to investment advice, transparency, suitability, fund selection, research unbundling and the use of fund platforms. 

Contributors of commentary to this guide include: Jackie Beard, director of manager research services for Morningstar; Susann Altkemper, counsel for City law firm CMS; Linda Gibson, director of regulatory change and compliance risk for BNY Mellon’s Pershing; Barry Neilson, business development director for Nucleus; Heather Hopkins, head of Platforum; Richard Romer-Lee, managing director of Square Mile Investment Consulting and Research; Fraser Donaldson, wealth management analyst at Defaqto; Phil Young, founder of support service Zero; Connor Sloman, head of products and client solutions for Morningstar’s EMEA division; Hugues Gillibert, chief executive of Fitz Partners; Sarah Lyons, head of marketing at Ascentric; a spokesman for Novia; Alistair Wilson, head of retail platform strategy at Zurich UK; Jennine Watts, regulatory solutions manager at SEI Wealth Platform; Richard Janes, spokesman for Brewin Dolphin; David Ogden, compliance manager for Seven Investment Management and Chris Darbyshire, chief investment officer for Seven Investment Management; AKG; The European Union; PricewaterhouseCoopers; Parmenion; the Financial Conduct Authority.

This guide qualifies for 60 minutes' worth of CPD although all timings are indicative approximations.

Simoney Kyriakou is content plus editor at FTAdviser

In this guide

CPD
Approx.60min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. Who should not find it overly burdensome to provide suitability reports, according to Ms Altkemper

  2. What is not a one-off exercise to be conducted at point of recommendation only, according to Ms Beard?

  3. With the onus on the adviser to provide clients with a statement of total costs and charges, what does Mr Nielson say may have to change?

  4. Mifid II is not black and white when it comes to what, according to Mr Sloman?

  5. Ms Hopkins says who is responsible for notifying clients of the 10% drop

  6. What does Ms Lyons say the required transparency under Mifid II is already doing?

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

  • To understand the rule changes coming in with Mifid II.
  • To be able to list what impact Mifid II might have on investment advice and platforms.
  • To learn what suitability measures will need to be implemented.

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