Independent advice

There is a part of the directive that talks about what independent advice is, which is similar to COBS 6.2A.3R.

A client must be informed by the adviser that investment advice is provided on an independent basis. There will be a selection process to provide a sufficient and comparable range of financial instruments available.

So where should an advice firm start its preparations for Mifid II?

As mentioned at the start, there is much online summarising as to what is thought to be happening.

Although we will not know exactly what will be included in the final legislation, there is enough to start an impact analysis project.

Indeed, the FCA has stated that firms must plan for the 3 January 2017 deadline and should not wait for ‘complete clarity’.

Suggested areas to start looking into could be: product governance – do you really know the solutions being recommended? Have you looked under the bonnet and understand how the product works? Do your advisers and clients?

Client communications – do your clients really understand the information provided? Can you improve your reporting and communications? (The FCA has some suggestions on their website.)

Frank Potaczek is head of insight and consulting for investments at Defaqto