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Mifid rules and platform charges: the week in news

Mifid rules and platform charges: the week in news

Politicians from around the world gathered in Davos this week to, in part, discuss the future of the UK once it exits the European Union. 

Back in the UK however, complex Mifid II rules and platform charges continued to cause disruption for the adviser community. It’s time for the week in news. 

1) Go on now, go, walk out the door

Advisers say they are being forced to turn away clients as a result of the Mifid II rule, which requires them to perform annual reviews of their clients' investment portfolios. 

According to advisers, because of the rule they need to spend hours reviewing the investments, whether the client specifically requested it or not. 

Financial Adviser spoke to an adviser based in London, one in the Midlands, and one in the north of England, and each agreed the Mifid rule was causing them to turn away clients with more modest portfolios as they are no longer profitable.

And Mifid being the gift that keeps on giving, advisers must also now begin disclosing actual costs and charges associated with client investments, rather than just estimates.

For anyone who thought they'd rely on their platforms to supply the necessary information, think again, as some platforms have a different approach to this than others.

2) A costly game

Research by Boring Money, on behalf of platform Interactive Investor, found the cost difference between the highest and lowest-cost platform was more than the average UK salary.

The research found the impact of charges over 30 years on an average stocks and shares Isa balance meant customers of the lowest-cost platforms would be £33,000 better off when compared with the highest-cost platforms.  

Naturally some of the costlier platforms questioned the validity of the research while pointing to the added value in their propositions.

But Boring Money stated fees were just too complex for ordinary DIY investors to decipher.

3) Straight to jail

Meanwhile this week fraudster Sami Raja, 32 of Grays, Essex, was sentenced to eight years behind bars after being found guilty of six counts of conspiracy to defraud and money laundering at Southwark Crown Court. 

The sentence followed an investigation by the City of London Police that found Raja, along with four others, had mis-sold carbon credits to victims through two companies, Harman Royce Ltd and Kendrick Zale Ltd, between January 2012 and August 2013.

The four other men involved in this case were sentenced in September 2018 in conjunction with other fraud cases investigated by other law enforcement agencies, including the Financial Conduct Authority.

4) Handbags at dawn

The Financial Regulators Complaints Commissioner has accused the FCA of taking sides – with a bank.

The complaint, which was first submitted to the commissioner in July 2017, involved a claim for consequential loss under the interest rate hedging products compensation scheme.

It was escalated to the commissioner after the FCA refused to direct the bank in question to deal with the claim under the IRHP Compensation Scheme.