Concern about Compliance with MiFID II

Concern that over one third of financial services are unsure if they are MiFID II compliant

What is MiFID II?

MiFID II is an EU Directive which comes into force January 3rd 2018. Its purpose is to offer greater protection for investors and create greater transparency in all asset classes: from equities to fixed income, exchange traded funds and foreign exchange.

How will it affect investment decisions?

The legislation will change how Asset Managers pay for the research they use to make investment decisions. Prior to the Directive, Asset Managers received research for free, although the cost of this service was paid into trading fees. This is generally is paid by Fund Managers’ clients. In a process called unbundling, under MiFID II Fund Managers will have to budget separately for research and trading costs.

Concern over compliance with the Directive

A recent survey, conducted by managed cloud service provider Timico, found 39% of UK financial firms are not sure whether their organisation is compliant with the new regulations, while just 8% of companies said their employees were fully aware of MiFID II’s legal implications and had received relevant training.

MiFID II also places strict controls on all communications; regulated firms will be obliged to document all communications that are intended to result in a transaction.

However, Timico found 42% of respondents said their firms do not currently have a mobile compliant platform in place to record calls, 25% said they are not yet compliant with recording requirements and 29% are still going through the compliance process.

Penalty for failing to adhere to MiFID II

Companies can be fined up to 5m Euros, or 10% of annual turnover, for non-compliance.

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IFAs remain resilient despite rise in robo-advice

Despite the rise in the use of robots as employees in the workplace, IFAs remain adamant that such technology will not replace their human face-to-face investment advice.

Although robots and automation are increasingly infiltrating the financial services industry, experts argue that there are certain matters which robot advice cannot be used for; robo-advice generally focuses on investments which relate more to saving money rather than providing advice. For the sale of financial final products, clients require face-to-face advice…

Additionally, robo-advisers lack the learning and experience which is picked up on the job while working in the marketplace. Robo-advisers also lack the ability to adapt to a client’s response and body-language during meetings…

However, there remains the argument that robo-advisers will save people money and may be appropriate for the absolute bare basic investor. The robo-advisers have proved that they are able to look at volatility in the market and allocate accordingly…

The conclusion appears to be that if people want to pay a low price they’ll choose the robots. Conversely, those wanting  a more detailed report will be willing to pay for a higher price and choose face-to-face advisers…

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FCA Announces that IFAs are to Disclose Esoteric Investment Recommendations


The FCA has recently announced that IFAs are to disclose more risky investment strategies which they have recommended to their clients

The FCA’s reforms follows its review of the Financial Services Compensation Scheme (FSCS); from 2013-2016 around a third of FSCS claims were linked to the sale of esoteric investment plans by Advisers.

During the consultation The FCA did not address the proposal that Advisers selling higher-risk products were to pay more towards the money pooled in the Scheme.

However, The FCA has agreed to such reforms as adding a new section to their online reporting system, GABRIEL, for calculating risky future levies. This will come into force on 1 April 2018. Other confirmed reforms include ordering Llyod’s of London to contribute to the funding that comes from retail firms.

A full list of the reforms will be accessible when The FCA publishes its papers….

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The Week in Numbers – 17th November

The Week in Numbers – 17th Novemberblue news

24% – Proportion of calls not answered by HMRC staff. MPs have criticised the tax office’s performance calling it “completely unacceptable”

£500 – Amount each new employer using The People’s Pensions for auto-enrolment will be charged in 2016

9 – Number of insurers on the Financial Stability Board’s “Too big to fail” list. Dutch insurer Aegon replaced Generali last week

400 – Number of advice firms and providers approached by the FCA for a data-gathering exercise to inform the Financial Advice Market Review

£10K – Compensation awarded by the Pensions Ombudsman to an Abbey Life customer who was made aware of a guaranteed annuity rate

£5bn – Outflows in the year to September at Prudential-owned asset manager M&G

£100m – Investment in film partnerships by Kingsbridge Asset Management on behalf of clients, including former England Footballers

£733,794 – Payout minus bonus and redundancy payment Partnership chief executive Steve Groves will receive when the provider merges with Just Retirement


Quote: “If we didn’t have Pension Wise, everyone would just go to their provider, and we know what they are like” – Pensions minister Ros Altmann argues it is in advisers’ and consumers’ interests to boost the take-up of guidance


Originally published in Money Marketing Magazine on 12th Nov 2015
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The Week in Numbers – 26th October

The Week in Numbersblue news

34% – Year on year rise in SIPP claims reported by the Financial Ombudsman Service, from 210 in Q3 2014 to 281 in the same quarter this year

10 Years – Length of SIPP administration deal agreed between Curtise Banks and Zurich

100 – Number of Sanlam Wealth Planning employees whose jobs are under threat after the firm placed its Rhyl and Worcester offices under review

£49 – Annual cost to members of using the Pensions and Lifetime Savings Association’s new automatic enrolment guidance service

£5.3m – loss reported by Nutmeg in its 2014 annual accounts

£11.3m – Profit recorded by Woodford Investment Management during its first year of trading

£263m – Losses on investments held by Brooks Macdonald in the three months to the end of Septmeber

One – Number of advisers on the 15-strong expert panel advising the Treasure and the FCA’s Financial Advice Market Review


“There is only so much you can chuck at an industry and expect it to cope” – Apfa director general Chris Hannant on the regulatory burden of extending the senior managers regime to advisers .


Originally published in Money Marketing magazine 22nd October 2015
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The Week in Numbers – 14th September

The Week in Numbers – 14th September

50% – Rise in protection sales reported by LV= in the first half of the year. Total life sales hit £869m, with profits of £12mWebsite Photos 011

£8bn – Size of Jupiter’s Merlin fund range. Jupiter’s John Chatfield-Roberts has stepped down as CIO to focus on managing the funds

2.83% – Average interest rate on gross mortgage advances in Q2, the lowest figure on record

£2.1m – Pre-tax profits for Curtis Banks in the first six months of 2015, up 82% from £1.2m in H1 last year

£12bn – Amount the tax on bank profits will raise, almost twice the Government estimate, according to EY

218 – Number of IFP members who engaged in a consultation on the CISI merger out of a total membership of 2,173

70% – Proportion of those who engaged in the consultation who backed the IFP/CISI merger

£1.9bn – AUM at Parmenion, the platform and DFM acquired by Aberdeen Asset Management


Originally published in Money Marketing Magazine 10th Sept 2015

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The Week in Numbers 11th June

The Week in Numbers – 11th June 2015blue news

8.7% – Year on year rise in the number of loans approved in April, from 105,394 to 114,628 according to the Bank of England

193% – Year on year increase in the number of people using an equity release plan to pay off their interest-only mortgage, from 78 in April to 229 this year, Age Partnership says

£4.3m – Money lost by 110 people who invested in a Ucis operated by eight individuals, five of whom were this week sentenced to a total of 26 years in jail

60 – Number of AR firms in L&G’s network, which the insurer plans to wind down by the end of 2015

20,000 – Potential job cuts due to be announced by HSBC next week, according to reports

£125.3m – Total value of investment trust purchases through platforms in the first quarter of 2015, a new record

£179,817 – The average UK house price in April, up 5.1% from £171,052 a year earlier, according to figures from the Land Registry

£5.6bn – Increase in assets under management at Henderson following the acquisition of three businesses in Australia


Figures originally published in Money Marketing Magazine 4th June 2015
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