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PrintNov 13, 2007
• MiFID identified by IFAs as one of the biggest key drivers of change in next 3 years
• Confusion still exists yet UK IFAs are well ahead of European counterparts
JPMorgan Asset Management (JPMAM) has launched its ‘Easy Guide to MiFID’ for UK advisors with 1,000 advisors having already downloaded the document in the first week. The comprehensive document provides answers to the myriad of questions surrounding the introduction of the new financial services regulation that came into effect on 1st November 2007.
Though MiFID is one of the biggest changes to hit the financial services industry in years and the UK IFA sector is well ahead of its European counterparts, there still remains a certain amount of mystery within the industry as to who exactly will be affected and what effect these changes will have on certain existing business practices.
It is already known many UK IFAs fall outside the scope of MiFID, but those wishing to advise or transact business in other EU states should be making the necessary changes to their business practices under the new directive. Yet JPMAM believes that despite MiFID having already taken effect, there still remains a certain amount of confusion surrounding the directive. JPMAM is looking to put this straight and is offering a helping hand with its ‘Easy Guide’ which aims to take the mystery out of MiFID.
Markets in Financial Instruments Directive (MiFID) is the latest part of the European Union’s Financial Services Action Plan (FSAP), which is designed to achieve the integration and harmonization of Europe’s financial markets. MiFID comes into Force on 1st November 2007 and for the first time it will ensure that investment advice is regulated in all EU states.
In the UK, the FSA secured an “opt out” for financial advisers which means that UK financial advisers are not automatically subject to MiFID obligations. UK advisers can “opt in” to MiFID if they advise clients in other EU states. By opting in they will receive a passport, under MiFID, that enables them to offer such services. In so doing they will have to meet all of the MiFID requirements, including specific capital and PII rules among others.
Only UK advisers that handle client monies or those that advise on or transact business in investments other than transferable securities or collective investments will automatically fall under the scope of MiFID. The majority of UK advisory firms, therefore, should fall outside the scope of MiFID.
Even so, MiFID’s effects will still be felt in the advisory community as the FSA has re-written its Conduct of Business Sourcebook in line with MiFID and all regulated firms need to be aware of the revisions. Similarly, MiFID will also influence other areas of regulation such as the Training & Competence Sourcebook and the rules on Inducements which are also currently subject to review.
Jasper Berens, Head of UK Retail Sales at JPMAM comments: “The UK represents the ‘Gold Standard’ in regulated financial advice in Europe and so the immediate effects of MiFID on most UK advisers will be small, whereas advisers in other countries will be playing catch up to the UK. Regardless of this, we should all know and understand the changes MiFID will bring and could potentially mean to our clients. We would urge all of our existing and potential clients to read the JPMAM ‘Easy Guide to MiFID’ and to act accordingly, now.”
JPMAM’s ‘Easy Guide to MiFID’ can be viewed at: www.jpmorganassetmanagement.co.uk