News and Views MiFID II Special Edition 2016

Global Trustee and Fiduciary Services News and Views | MiFID II Special Edition 2016

the MiFID scope business of Article 3 firms,

while keeping the existing rules in place for non

MiFID business until it implements the Insurance

Distribution Directive (IDD).

For retail clients, the FCA proposes applying

the MiFID II inducements standards to both

independent and restricted advice, continuing to

ban the rebating of inducements, and extending

this to portfolio management.

For personal recommendations on retail

investment products (RIPs) to retail clients

in the UK, the FCA will keep the existing RDR

standard set out in the adviser charging rules,

and clarify that it applies to the wider business

of providing advice.

Inducements and research

Given the link in MiFID II to the inducements

rules, the FCA proposes replacing its existing use

of dealing commission rules

with a new section

to transpose the MiFID II rules. It also proposes

that the MiFID II rules should apply to firms

carrying out collective portfolio management,

which includes UCITS management companies

and Alternative Investment Fund Managers

(AIFMs), including small authorised AIFMs,

residual collective investment scheme operators

and incoming EEA AIFM branches.

Furthermore, the FCA proposes the following:

Client categorisation

Criteria for the opting-up of local authorities

(and local authority pension schemes) from retail

client status to elective professional client status.

Disclosure requirements

Changes to implement the wide variety of

disclosure requirements in MiFID II. These

include information about the firm and the

products it sells, disclosure of costs and charges

and the provision of periodic reports to clients.

Independence

The application of the MiFID II independence

standard for personal recommendations to

recommendations relating to MiFID financial

instruments, structured deposits and (in relation

to retail clients in the UK) non-MiFID RIPs.

Suitability

Updating the current suitability rules in COBS 9

with the changes required by MiFID II. The

changes will apply to MiFID business and to

Investment

managers,

(including individual

and collective

portfolio managers)

Banks

Stockbrokers

Investment

firms

Investment

advisers

Financial

advisers

Interdealer

brokers

Corporate

finance firms

and venture

capital firms

Local

authorities