TISA, which is unique in the fact that it covers the entire financial industry, incorporating cross-sector policy, industry and technical expertise alongside consultation with government, regulators and the wider industry, believes that there are particular risks posed by the Directive, particularly around complex products, appropriateness, suitability and product governance.
Commenting on the FCA’s D15/3 discussion paper regarding the implementation of MiFID II, Jeffrey Mushens, TISA’s Technical Director, said:
“TISA supports consistency of regulation throughout the retail investment market. However, our chief concern is that the practical implementation of MiFID II could result in unintended consequences by reducing the options for the consumer in the range of investment choice and also in the type of provider. It could also impact the implementation of new technology by limiting the number of investments available to the consumer to purchase without advice. This would mean that those who do not want to pay for advice would be particularly affected.
“For the industry, any increase in suitability and appropriateness tests will inevitably lead to higher costs and risk for firms, further adding to their regulatory burden.
“Therefore, we believe it is critical that the Directive does not extend the scope of complexity to include, for example, peer-to-peer loans or default funds for personal and occupational DC pensions or UK listed investment trusts.
“We would like to see more details of the specifics of what product governance the Directive envisages and encourage the FCA to revisit its obligations to firms in respect of appropriateness tests.
“Finally, we support the adoption of the proposed standards for independence but have serious concerns about the requirements for telephone records to be kept for five years. Not only is this impractical but it is also expensive, onerous and of little or no direct benefit to customers.
“We believe serious consideration should be given to our recommendations, which place the best interests of both the nation and consumers at the forefront.”
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