Putting MiFID II in to context: WMA responds to FCA Discussion Paper
22nd May 2015
The Wealth Management Association (WMA) has been assessing the potential implications of MiFID II since ESMA’s Level 2 Advice to the Commission was published in December 2014. The WMA has been working collaboratively with its members, including holding 10 member roundtables, all with excellent attendance. The output from these sessions has been sent to the FCA as part of the WMA’s ongoing engagement with the regulator.
In addition to the ongoing work on MiFID II the WMA has submitted its response to the FCA’s Discussion Paper “Developing our approach to implementing MiFID II conduct of business and organisational requirements”.
Some of the key issues in the WMA’s response include:
- The WMA considers that the MiFID II standard of independent advice is different, in practice, to the UK RDR standard, with the MiFID II concept of independence better reflecting the generally-understood dictionary definition of independence (i.e. not influenced or controlled by others) than the RDR definition. We believe the RDR should be replaced by the provisions in MIFID II, as this would provide an opportunity to address some of the anomalies arising under the current RDR regime.
- An initial review of MiFID II’s cost disclosure requirements by WMA and its members indicates that there is currently insufficient detailed information to allow systems development to meet the information requirements. There are significant third party dependencies; in particular, our member firms cannot see how they will be able to present product costs data unless PRIIPs data is available and aligned with MIFID II requirements and there are third party vendors collating the data to enable it to be loaded into firms’ systems.
- WMA firms believe that the MiFID II telephone recording requirements (extending recordkeeping from 6 months to 5-7 years and requiring complex storage, indexing and retrieval systems) will be very expensive to implement with costs likely to significantly outweigh benefits. Similarly, the proposed withdrawal of the recording exemption for discretionary investment managers looks likely to place a considerable burden on smaller firms for no obvious purpose other than regulatory consistency. While the WMA agrees that MiFID/non-MiFID requirements should be harmonised in order to ensure a level playing field between firms undertaking similar business in similar investments for similar clients, the FCA should not be pursuing consistency for its sake.
Ian Cornwall, Director of Regulation at the WMA, commented:
“The WMA is collaborating closely with our member firms to address the challenges arising from the implementation of MiFID II. We are continuously engaging with the FCA and providing them with detailed implementation issues we are identifying as part of our work on MiFID II. The issues we raise in our discussion paper response reflect some of this work. The challenge of successfully implementing the provisions of MiFID II can only be met by a collaborative approach with all stakeholders”.
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Notes for Editors
About the Wealth Management Association (WMA)
- The Wealth Management Association (WMA) is a trade association representing 186 Wealth Management firms and Associate members
- 110 full members are wealth management and stockbroking firms that deal directly for over 4 million retail investors.
- They deal in stocks and shares and other financial instruments for individuals, trusts and charities through a range of services spanning execution only, advisory and discretionary fund management.
- 76 associate member firms provide professional services to our full member firms.
- WMA’s aim is to ensure that business, regulatory, tax and other relevant changes across Europe are appropriate and proportionate for the investment community and their clients.
- The WMA exists to support its members and their clients in the following ways:
- To be an advocate for the sector with governments, regulators and the wider financial services community;
- To influence policy and also decision makers within the wider sector to the benefit of WMA members and their clients;
- To research and provide definitive information about the sector as required for members and in support of the influencing and advocacy objectives;
- To be a thought leader, to lead and stimulate debate and make members aware of emerging trends; challenging and provoking change.
- Facilitating the sharing of good practice, enabling the membership as a whole to benefit from the latest developments affecting the sector as well as providing support to enable them to develop good prescribe and overcome challenges.
- Our member firms manage in excess of £670 billion of wealth in the UK, Ireland, Channel Islands and Isle of Man.
- The firms operate across more than 580 sites, employing over 32 000 staff.
- The firms also run over 5.5 million client portfolios and carry out over 20 million trades a year.
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