Key considerations for advisers and intermediaries.

For financial advisers and intermediaries only

Here’s an overview of some of the key business changes you should be considering.

1. Review your business model

  • Independent advice: Consider the change in definition of 'independent' and whether this affects your business.
  • Target market: Define a distribution strategy, your target market and ensure you have governance arrangements in place to monitor this. You should ensure funds and instruments are sold in line with your target market (including fund target market), as this information will be fed back to fund managers.
  • Staff training: Train staff to required competency standards under MiFID II.
  • Telephone and electronic monitoring and recording: Put in place appropriate telephone recording for customer calls and electronic communications with regard to trades, or alternative arrangements if your firm falls under Article 3.
  • Governance, inducements and conflicts of interest: Update governance and policies in line with MiFID II to cover inducements, conflicts of interest, understand inducement changes and consider how this will affect your business. 

2. Client advice and notification

  • Suitability: Align suitability reports to MiFID II standards. These need to be produced even where a hold position is being advised to clients.
  • Pre-sale illustrations: Issue pre-sale illustrations either through an online or offline journey. It’s your responsibility to ensure your client has this pre-sale information.
  • Fund costs: Understand and explain what implicit fund costs are to customers
  • Costs and charges: Be prepared to discuss costs and charges more with your clients providing full disclosure of all fees and charges relating to the transaction.
  • Quarterly statements: Ensure customers are aware that going forward they may receive quarterly statements.
  • Access to funds: As a result of complexity and target market changes under MiFID II, some customers may not be able to top up or buy investments that they have previously had access to. Advisers and intermediaries will need to explain this to customers.

3. Trading

  • Legal Entity Identifiers (LEIs): If trading in listed securities (for example, equities, investment trusts, and exchange traded funds and units in collective schemes), advisers and intermediaries will require a LEI. Customers trading in these products without an adviser will need to provide their NPUI and some companies and trusts may also need to provide a LEI.
  • Marketing monitoring: Firms will need to monitor their target market on an ongoing basis and provide board level oversight.
  • Sales outside the target market: If investments are sold outside of the target market, the fund manager may request further information from the adviser or intermediary to understand why.
  • 10% market fall: Firms who provide discretionary portfolio management services, will need to notify advisers when investments fall by more than 10%. If advisers work with a discretionary fund manager they need to agree how information about a greater than 10% fall in the market will be confirmed and shared with clients as appropriate. We'll notify you by email if your client's portfolio value falls by 10% and provide details of the client's impacted to allow you to contact them.
  • Best execution policy:  You’ll need to be aware of our Order execution policy when trading. We’ve updated our Order execution policy and it’s available in our document library.