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TISA to work with industry to deliver clarity around appropriateness & product governance in MiFID II

July 30, 2015

Working groups to be established to determine good practice guidelines

TISA, the financial services membership organisation, has called for greater clarity and understanding around the issues of appropriateness and product governance in MiFID II, ahead of the FCA conference in October to be followed by the FCA Consultation Paper in December. At a pan-industry open forum held by TISA on Wednesday 29th July it was agreed to form two working groups to tackle these key issues and engage with the FCA with a view to developing good practice industry guidelines.

MiFID II is now in implementation phase. TISA recognises this is a good opportunity for the industry to consider what good practice could or should look like in these areas and help provide guidance. TISA has used a similar model before in areas such as share class conversions, which was very successful.

The aim of the open forum was to bring the industry together to identify issues and future objectives. The following issues relating to appropriateness and product governance were raised at the meeting:

  • Definition of complex versus non-complex products?
  • What does best practice look like for product governance?
  • What does it mean by target market? What will it look like?
  • Information flows between manufacturer and distributor?
  • How can technology be used and what will the impact be?
  • What is the impact on execution only closed end funds?
  • What will appropriateness look like in practice?
  • What are the implications for clients?

Jeffrey Mushens, Technical Director of TISA said:

“We are pleased with the support and responses we’ve received from across the industry on what we recognise as two of the central issues in MiFID II – appropriateness and product governance. This clearly demonstrates why it is so important to discuss the implications for the industry and to engage with the FCA, which will be writing and implementing the rules around these issues.

“For many, it has been a wakeup call and a recognition that MiFID II will have significant impact on their business. The Directive makes it very clear that firms, which manufacture or distribute a product will also be expected to have appropriate organisational arrangements that specifically address the issue of product governance. Whilst there has always been a requirement to understand the products under advice, this is not required to be more organised and formal, thus, the Directive increases expectations on existing systems and controls.

“TISA is taking the lead in helping its members and the wider industry to understand the implications of MiFID II and to present their views and recommendations to the FCA. We are keeping the FCA informed and hope that from this, they will take a keen interest in moving forward on these two issues. We see this as a window of opportunity to influence regulatory thinking and develop standards for the industry in these key areas and hope the initiative will be positively met.”

Two working groups will be established by TISA to lead on these issues. At the first meeting, a Chair and Deputy Chair will be elected to lead the policy development, TISA will direct both groups and provide the administrative support.

Ends….

For further information please contact:

Alistair Kellie – Telephone: 020 7680 6558/ Email Alistair.Kellie@newgatecomms.com

Sara Lyons – Telephone: 020 7680 6550 / Email Sara.Lyons@newgatecomms.com

Nick Morris – Telephone: 020 7680 6557 / Email Nick.Morris@newgatecomms.com

Email: TISA@newgatecomms.com

Notes for Editors

TISA is a not-for-profit membership association operating within the financial services industry. We represent the interests of over 147 member firms involved in the supply and distribution of savings and investment products and services.

TISA has a highly successful track record in working cooperatively with government, regulators, HMT, DWP and HMRC to improve the performance of the industry and the outcomes for consumers. Policy and regulation continues to be the major focus for our members with regard to corporate responsibility.

TISA and its members’ remit is evolving into a clearer focus on pro-active consultation in the regulatory world in order to influence policy and associated regulation before its creation, rather than reacting to issued policy directives. This will help to ensure a more considered policy creation from the authorities.