Advisers have been urged to shop around if they need a Legal
Entity Identifier under Mifid II as fears have been raised that scam companies could take advantage of the market.
LEIs will be required where the client is not an individual, for example if they are acting under a legal entity or structure such as a company, charity or trust.
Many firms are currently applying for LEIs to make sure they
are compliant with plenty of time ahead of July. The deadline for firms to have LEI’s for their clients was initially 3 January but this was extended by six months by the European Securities and Markets Authority.
However, advisers have cited frustrations with the application process.
One adviser, Montgo Consulting director Mike Grant, says he grew
frustrated with the application process when he tried to register
through the London Stock Exchange for a code. The LSE was charging £138
including VAT for registration.
He says: “I struggled to navigate my way through a highly complex and
confusing process and gave up after two attempts.”
Grant turned to a fellow IFA for advice and was recommended a German
company EQS. Not only was it less than half the price, but the process
was much easier, he says.
“The contrast could not have been starker. The website was very user
friendly, intuitive and the application was simple and quick.”
Grant paid a fee of £51.56 to EQS and says he had the LEI within two hours.
EQS deputy managing director for Germany Sven Schenkluhn says: “We do
the same thing as LSE but we are the cheapest in Europe while [the LSE] is
one of the most expensive.”
London Stock Exchange Group declined to comment.
Advisers also have to pay an annual fee to renew their LEIs which is
£60 with EQS and £84 a year with LSE including VAT.
LSE and EQS are two of fewer than 25 Local Operating Units worldwide that can issue LEIs.
Zero Support managing director Phil Young says: “It is vital that IFAs
check that they are dealing with a credible company as it is possible
that we could see scam sites being set up.
“Also advisers should check that they are not dealing with a white
label or agent of an LOU and paying more than necessary for the same
service because that agent takes its own fee.”
Financial advisers should also notify any SSAS clients on their books
that they will need an LEI and of the cost of the different
registration options available.
Hargreaves Lansdown chartered financial planner Danny Cox says the
firm has written to clients who are affected.
He adds: “It’s unfortunate that limited numbers of clients are faced
with hoops to jump through and additional cost, as part of the twin
aims of greater transparency and investor protection under MiFid II.”