In its recent response to the European Securities and Markets Authority’s (ESMA) Call for Evidence on Inducements and Costs and Charges Disclosure Requirements under Markets in Financial Instruments Directive (MiFID) II, the Personal Investment Management & Financial Advice Association (PIMFA) has outlined its concerns about the complexity of these disclosure requirements and the burdens they place on firms seeking to comply with those requirements.
ESMA suggests that certain difficulties identified with the current regime can best be addressed through further, more detailed rules and mandated presentation formats. PIMFA has responded saying that MiFID II should not provide any more detailed rules governing the timing, format and presentation of these disclosures at this current time as well as loading further significant costs on firms.
They argue, this would only serve to further confuse consumers, who are less than clear about what the new MIFID II disclosures mean. Instead, if amendments to the MiFID II costs and charges regime are required, they should be subject to a review process that requires detailed consultation, cost-benefit analysis and consumer testing, while also taking into consideration the industry, consumer and supervisory experience of the operation of the current regime to date.
“We have made it clear that, if there was to be any hope of MiFID II being applied consistently across the industry, the regulators would need to provide unambiguous and detailed provisions on which firms could base both systems specifications/development," said Sarah McGuffick, lead regulatory policy adviser at PIMFA. "This, in turn, could result in the necessary changes to in-house processes and procedures. The fact that this did not happen has resulted not only in firms incurring huge costs in interpreting and applying regulation but also in their diverting resources away from their most important function, namely the day-to-day servicing of their clients’ needs and wishes.”
The full consultation response is available to read on the PIMFA website.
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