Some may say advisers in the UK are lucky, that they are ahead of the regulation game. The introduction of the Retail Distribution Review in December 2012 could be considered a considerable head start for advisers preparing to face Mifid II – with curbs on inducements and requirements on firms that give independent advice, tougher powers to ban products and requirements for product governance, these rules should not feel all that new to advisers active in the UK market.
However, despite the similarities between the two pieces of legislation, Mifid II promises to make even more considerable changes to the face of advice in the UK. Also, assuming advisers in the UK are completely prepared for what’s to come could underestimate the degree to which these new rules may affect them and their businesses.
Some industry players, like the Wealth Management Association, have called for Mifid II to replace the RDR. “The adoption of the MiFID II provisions provides an opportunity to address some of the anomalies arising under the current RDR regime.
“In summary, we believe the RDR should be replaced by the provisions in MiFID II. Our belief is that the RDR has failed to meet its objective in terms of clarity of service. The RDR definition continues to be widely misunderstood,” the association said.
The introduction of Mifid II has been delayed by a year after national and European regulators warned the industry is not ready for it, largely due to a number of inefficient IT systems. The EU Parliament confirmed in June this year that the introduction of the new legislation will be postponed to January 2018 from January 2017.
But the delay does not mean the industry can sit back and relax – rather it simply gives players more time in which to prepare themselves for the upcoming changes.
The referendum result which saw the UK vote to leave the EU in June this year also throws up questions of whether advisers should even bother getting ahead of this regulation. There are many unanswered questions in this regard. Until the UK officially withdraws from the EU, then European laws will continue to apply. However, given the aforementioned delay and the time it takes to transpose EU legislation into local laws, some question whether UK advisers will have to bother complying with Mifid II at all. Some have suggested however that even post-Brexit, the UK may want to keep the Mifid regime intact, after all some of the rules are already in place and many changes to the regulation were made at the UK’s request.
The findings in this report are based on original responses from 612 advisers collected by CoreData Research between October and November 2016.