Gina Miller attacks FCA over failure to tackle Mifid II breaches

SCM Direct founding partner Gina Miller has criticised the FCA for failing to tackle firms breaching Mifid II rules in its final asset management study report.

The FCA published its final policy changes on Thursday, introducing new rules forcing fund managers to ensure their products provide value for the end investor.

Miller criticises the regulator’s failure to respond to “flagrant breaches and potentially illegal activity” by firms regarding fees and charges disclosure required under Mifid II.

She says: “It is shocking how long it has taken the FCA to achieve nothing more than restating the obvious.

“They have dealt with important but relatively minor negative industry malpractices, such as box profits, but not the substantive issue of misleading fees through the various distribution channels.”

SCM Direct estimates that the failure by the FCA to enforce the costs and charges provisions within Article 24 of Mifid II is costing UK consumers between £903m and £3.3bn per annum.

Miller says SCM Direct has sent a 90-page dossier to the FCA detailing industry-wide noncompliance with Mifid II.

She says: “Kicking the issue into the long grass yet again, is an indictment of an industry and regulator that both refuse to protect consumers.

She adds: “The FCA cites the work being done by the Institutional Disclosure Working Group but this is only for institutional investors. Ordinary consumers continue to be treated as second class citizens by the FCA and industry.”

Miller says evidence compiled by SCM suggests several FCA-regulated firms may have committed a criminal offence of “misleading statements and impressions”.

SCM has written to the FCA requesting an immediate investigation into firms it alleges are not compliant with Mifid II.

It has also asked the FCA to set up a retail taskforce to ensure that an industry-wide mandated common costs and charges template is implemented by 1 September.

Miller says SCM Direct will consider “legal remedies including seeking a Judicial Review” if the FCA fails to confront firms allegedly breaking Mifid II rules.

The regulator also launched a further consultation asking groups to give feedback on how they can improve the way they communicate fund objectives to clients.

While the market study has been warmly greeted by most of the industry, there are fears the new rules could force up costs for fund groups.

Recommended

Compliance tip: Do you need to opt out of Mifid II?

There are many reasons why a firm might wish to amend its status from Exempt CAD to Article 3. Exempt CAD firms have usually opted into Mifid in order to passport their investment services into another EU member state, or to enable them to transmit orders in unregulated collective investment schemes to non-Mifid firms. Article […]

1

Brexit weighs heavier than Mifid II on analysts’ job moves

Fund groups are taking on more analysts from investment banks on the back of European regulatory change as large brokers increase their focus on Brexit, recruiters say. Under Mifid II, asset managers are required to separate the cost of broker research from portfolio transaction costs and, in most cases, are bearing the costs internally. The […]

Business woman with question mark on a blackboard
7

Advisers call for FCA clarity on Mifid II cost disclosure rules

Concerns grow that rules to boost transparency are baffling for consumers. Increased confusion around cost disclosure rules has led advisers to question how the FCA is communicating what it expects from Mifid II. While the disclosure of any ex-ante and ex-post costs charges is covered extensively by EU regulator the European Securities and Markets Authority, […]

Tapering of annual allowance – adjusted and threshold income

The definitions of adjusted income and threshold income used to determine whether, and to what extent, someone’s annual allowance will be reduced can be confusing.  Here we try to make sense of it all. The annual allowance will be reduced for high income individuals from 6 April 2016.  Our previous article Tapering of annual allowance […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. I wonder when the fees of index stocks like Scottish Mortgage are going to be reflected in tracker funds’ charges?

  2. Self serving publicity if you ask me

Leave a comment