Hargreaves Lansdown unintentionally broke the Mifid II rules in March of this year, the company has confirmed.
Under the Mifid II rules, introduced at the start of this year, retail fund platforms are required to confirm the nationality and National Client Identifier (NCI) of clients who are not UK nationals.
Platforms must confirm the identity of these clients under Mifid II rules in order to place trades on exchange traded securities such as shares, exchange traded funds (ETFs), investment trusts, corporate bonds and gilts.
A spokesman for the company stated in accordance with Mifid II it had written to, and emailed, clients affected by this rule.
In cases where the clients didn't reply with the information needed, Hargreaves Lansdown had not permitted those clients to invest, and instead the money was held in client accounts in cash in January and February.
However the Bristol-based broker did, accidentally, invest the capital in March in breach of the Mifid II rules.
A spokesman for Hargreaves Lansdown said the broker has contacted clients and offered to reverse the deals it carried out on their behalf in March.
In subsequent months the spokesman for Hargreaves Lansdown said the company reverted back to not investing on behalf of those clients it still does not have the legal entity identifier for, as the Mifid II rule requires.
Danny Cox, head of communications at Hargreaves Lansdown, said: "The equity regular savers who had not completed their identifier checks had their savings ceased in January and February.
"Inadvertently we invested March's monthly savings, then ceased again from April. We wrote to clients advising them of this offering to reverse the deals."
When asked had Hargreaves Lansdown notified the FCA about the mistake, Mr Cox said: "The FCA requires us to report significant or material breaches.
"In this case we recorded the issue internally but it was not significant or material and therefore was not reportable."
Mr Cox declined to reveal the precise number of Hargreaves Lansdown clients affected, but claimed it amounted to 5 per cent of clients who have an equity regular savings account.
He said: "Only 5 per cent of clients who have equity regular savings were affected reflecting the success of the substantial and comprehensive communication project we put into place to help investors understand the Mifid II requirements, and make the process easy for them to complete.
"We wrote to these clients to advise them of the issue, apologising."
Mike Barrett, consulting director of platform, pension and investment consultancy the Lang Cat, said he remembered telling advisers about the legal entity identifier requirements for their clients at the end of last year and said "there was a lot of grumbling."
He said: "By the time the rules came in, I think most advisers had sorted it out. That a company of the size of Hargreaves Lansdown could inadvertently breach the rules shows how complicated the Mifid rules are."
Platforms incurred significant costs in preparing for Mifid.
A spokesman for the FCA failed to respond to a request to comment on the fact Hargreaves Lansdown had broken a Mifid II rule.
Back in June, the FCA warned it will start holding firms to account for failing to comply with the Mifid II rules.
The regulator took a back step in the six months after Mifid II was introduced on 3 January, to balance implementation of the new rules with ensuring markets function well but is about to change this approach, chief executive Andrew Bailey told MPs.
Speaking at a grilling before the Treasury select committee, Mr Bailey said: "Mifid II is probably the biggest piece of financial market legislation there has been so our approach at the outset was to prioritise the functioning of markets.
"We tend to not enforce immediately so the first [phase] would be supervision rather than enforcement but I want to be clear firms have to obey Mifid II.
"We were balancing getting it introduced with markets functioning effectively, giving some time for things to settle down because we had to deal with a few things on the run in the early days and weeks.
"But we have a programme of supervision that is underway and of course after a while we will enforce if people [don't comply]."
David Ferguson, chief executive of Nucleus, said his business had spent less than £100,000 on preparing for Mifid, while other platforms stated they spent more than that amount.
david.thorpe@ft.com
