TISA response to FCA’s discussion paper on the implementation of MiFID II
TISA, the not-for-profit membership association, warns that many asset managers, distributors, wealth managers, life and pensions companies and firms for whom D2C is important are unaware of the implications of the MiFID II Directive.
TISA, which is unique in the fact that it covers the entire financial industry, incorporating cross-sector policy, industry and technical expertise alongside consultation with government, regulators and the wider industry, believes that there are particular risks posed by the Directive, particularly around complex products, appropriateness, suitability and product governance.
Commenting on the FCA’s D15/3 discussion paper regarding the implementation of MiFID II, Jeffrey Mushens, TISA’s Technical Director, said:
“TISA supports consistency of regulation throughout the retail investment market. However, our chief concern is that the practical implementation of MiFID II could result in unintended consequences by reducing the options for the consumer in the range of investment choice and also in the type of provider. It could also impact the implementation of new technology by limiting the number of investments available to the consumer to purchase without advice. This would mean that those who do not want to pay for advice would be particularly affected.
“For the industry, any increase in suitability and appropriateness tests will inevitably lead to higher costs and risk for firms, further adding to their regulatory burden.
“Therefore, we believe it is critical that the Directive does not extend the scope of complexity to include, for example, peer-to-peer loans or default funds for personal and occupational DC pensions or UK listed investment trusts.
“We would like to see more details of the specifics of what product governance the Directive envisages and encourage the FCA to revisit its obligations to firms in respect of appropriateness tests.
“Finally, we support the adoption of the proposed standards for independence but have serious concerns about the requirements for telephone records to be kept for five years. Not only is this impractical but it is also expensive, onerous and of little or no direct benefit to customers.
“We believe serious consideration should be given to our recommendations, which place the best interests of both the nation and consumers at the forefront.”
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For further information, please contact:
Issued on behalf of TISA by Newgate Communications
Alistair Kellie – Telephone: 0207 680 6558/Email Alistair.Kellie@newgatecomms.com
Nick Morris – Telephone 0207 7690 6550/Email Nick.Morris@newgatecomms.com
Notes for Editors
TISA is a not-for-profit membership association operating within the financial services industry. We represent the interests of over 145 member firms involved in the supply and distribution of savings and investment products and services.
TISA has a highly successful track record in working cooperatively with government, regulators, HMT, DWP and HMRC to improve the performance of the industry and the outcomes for consumers. Policy and regulation continues to be the major focus for our members with regard to corporate responsibility.
TISA and its members’ remit is evolving into a clearer focus on pro-active consultation in the regulatory world in order to influence policy and associated regulation before its creation, rather than reacting to issued policy directives. This will help to ensure a more considered policy creation from the authorities.