When it comes to European financial services regulation, there can be a sense of policymaking happening at a distance, in a remote office in Brussels far removed from the daily travails of adviser life.
Advisers may feel dealing with the mounting regulatory requirements from just the FCA is more than enough for them to be getting on with. But at least with UK regulators, you know what you are getting to a large extent. With Europe, there are three European Supervisory Authorities to choose from.
Then legislation has to be drafted at European Commission level before snaking its long, painful way through the legislative process at both the European Parliament and the European Council. There is the added complication of whether the rules take the form of a directive, which each member state has to implement individually, or regulation, which is automatically binding.
I say all of this because there is one piece of legislation coming down the track that advisers need to sit up and pay attention to – Mifid II.
As with all European policy, Mifid II has been a long time in the making. The European Commission launched its first consultation on revisions to Mifid in December 2010, with proposals on what the new rules could look like published in October 2011. Back then, the 2017 deadline to comply would have seemed far away enough not to worry about it too much, particularly with the more pressing RDR deadline to contend with.
Even now, some may say the best part of two years is plenty of time to grapple with any new regulation heading advisers’ way. Yet the FCA is only planning to confirm its final rules by July 2016, which cuts down firms’ preparation time significantly.
And reading between the lines, the FCA is worried. Director of markets David Lawton warned firms in September that failing to prepare to comply with Mifid II “will not be considered acceptable”. This was followed last month by references to a “challenging” timescale for implementation.
Mifid II is broad in its scope, covering issues such as independent advice, inducements, and cost disclosure. One particular challenge for advisers is the requirement to record all telephone conversations relating to a client transaction. Quite apart from the additional compliance burden, one wonders just how this throwback to corporate culture will sit with potential and existing clients. It does not exactly engender a trusting relationship between adviser and client.
Natalie Holt is editor of Money Marketing – follow her on Twitter here