Guest blog from Julia Kirkland, Senior Partner at FSTP
If you don’t know already, which of course you do, the Markets in Financial Instruments Directive (MiFID) is EU legislation which first came into effect in 2007. It was created to regulate firms providing services to their clients which are linked to ‘financial instruments’, these being shares, bonds, units in collective investment schemes and derivatives. In addition, it covers the venues where those ‘financial instruments’ are traded.
Fast forward 10 years or so and we have an updated version – MiFID II. This includes the revised MiFID and a new Markets in Financial Instruments Regulation (MiFIR). January 3, 2018 is the day MiFID II must be implemented across Europe.
Now we’re on the cusp of this deadline, the thorny and sensitive topic of Knowledge and Competence (K&C) is bubbling up as a major concern across the industry. We’ve spoken with numerous firms in both the Asset Management and Wealth Management sectors and they have one thing in common; they’re all grappling with the assessment of competence of information providers.
Who is in scope?
In Asset Management, this may cover a wide range of roles from sales teams, client services, broker servicing staff to Portfolio Managers (the really sensitive aspect of K&C). Managers may struggle with the fact they must tell a Portfolio Manager of 20 years plus who hasn’t got a formal qualification, they need to be assessed as competent and in a very short timeframe too.
In Wealth, the scope may cover desk assistants, team secretaries and portfolio assistants who may all be in direct contact with clients, giving them information about prices, valuations, charges and providing generic market or sector views. Additionally, research teams who might attend meetings with clients to provide market, sector or stock views on a non-advised basis may fall under this too. Most of the firms we are speaking to are including research teams. Most of the above staff members have never been included in formal K&C Schemes before but this has changed.
What happens in 2018?
As it stands, information providers not assessed by January 3 will need to be supervised in their activities and oversight of any client interaction must be in place. If you’re not prepared, January 2018 is fast approaching and maybe it’s time to look outside your company for third party support and assistance.
Our guest blogger Julia Kirkland, is Senior Partner, FSTP
FSTP is a training solution provider with expertise in MiFID II and the company also runs workshops to cover Wealth and Asset Management to meet the ESMA requirements and provides advanced K&C assessments for more seasoned, professional staff.
Knowing the implementation date for the second round of SM&CR is the 9th December 2018 doesn’t necessarily make it any easier. Firms will be at different stages in preparing to meet the requirements that this enhanced regulation will bring. For the banks, building societies and designated investment firms the implementation phase is long gone but living with the everyday implications is still keenly felt. One thing they will tell you is that preparing for that implementation took a lot longer than they had anticipated.
Feedback from the regulators has demonstrated that a lot can be learned from mistakes and lack of application to the process. They are expecting you to learn from those mistakes and will be less than tolerant if you don’t.
Holding individuals to account is a key component of effective regulation. The Regulators believe the Senior Managers Regime, SMR and the Certification Regime, CR will address the lack of trust in the Financial Services Sector following the 2008-2009 financial crisis.
The focus on the behaviour and competence of individuals who hold positions of responsibility which could cause client, industry and market detriment has never been more intense.
Individuals in positions of influence who have never held approved person status before will now be held accountable for their decisions and actions.
Whether you are an Enhanced or a Core Firm the Regulators will look at how you are applying the new requirements appropriately for:
The Senior Managers Regime
The Certification Regime
The New Conduct Rules
Fit and Proper Assessment
The Senior Managers & Certification Regime – The Implications For FCA Solo Regulated Firms | FSTP
January 24, 2019 10:00 am – 12:00 pm
Since the merger with the IFP, the CISI have worked hard to develop their qualification pathways for Financial Planners. There are now two routes to achieve the Level 4 benchmark and a Diploma leading to Certified Financial Planner status.
Certificate in Paraplanning – Level 4
Aimed at those who are already working as a Paraplanner, but who wish to develop their skills in preparation for a move to a Financial Planner role. This qualification ensures you have the right balance of technical knowledge and skills to perform your role.
There are two exam papers:
Financial Planning and Advice
Taxation in the UK for Individuals and Trusts (or Investment, Risk and Taxation)
All are examined by computer based testing, with a total estimate of 260 hours recommended study.
Investment Advice Diploma (IAD) – Level 4 and RDR compliant
As part of the IAD qualification, the Financial Planning and Advice paper has been designed to be RDR compliant and meet the requirements for those advising on retail investment products and friendly society tax-exempt policies (FCA Activities 4 & 6). For those wishing to pursue a career in financial planning, or wealth managers wanting to broaden their knowledge, this route provides solid coverage of key principles and technical knowledge.
There are three exam papers:
UK Regulation and Professional Integrity
Investment, Risk and Taxation
Financial Planning and Advice
All are examined by computer based testing, with a total estimate of 460 hours recommended study.
Diploma in Financial Planning
Leading to Certified Financial Planner certification, this specialist qualification will test your application of the knowledge and skills you already hold to produce a financial plan.
You will be issued with a case study and given 12 weeks to submit your plan. Assessment takes 8 weeks; with feedback given on the plan should you not meet the criteria within the marking standards. You can re-submit your plan within a new 12 week period once you have addressed the development areas.
With an estimated 400-700 hours of recommended study time this route is for those with a strong background in financial planning who want to challenge themselves and stand out from the crowd.
CISI Financial Planning & Advice | FSTP
January 9th & 10th, 2019 9:30 am – 5:00 pm