Financial services companies may have been saved from an EU proposal which would have required firms to issue clients with "two-way consent" paperwork on new terms of business.
Earlier proposals for the Markets in Financial Instruments Directive – which affects all investment advice – appeared to indicate there could be a requirement on all financial services firms to revise their terms of business and reissue them to all clients, whether new or existing, once MiFID and the new EU regulations come into force in 2007.
It is not actually the Commission which initially proposed the reissuing of TOB paper, but the group of European regulators known as the Commission of European Securities Regulators (CESR) which had earlier produced its guidance on MiFID plans to the European Securities Commission – the committee which contributes to the creation of EU regulation and legislation.
Repapering would be a huge exercise for firms concerned, both in process and cost terms.
However, Sheila Nicoll, deputy chief executive at the Investment Management Association(IMA), says it is believed the European Commission has now decided not to adopt this proposal.
“Repapering would require firms going back to clients and exchanging old [Terms of Business] for new ones. Repapering is one of those proposals which is not to be adopted yet,” says Nicoll.
The IMA says this would be good news as it appears the industry has successfully lobbied against such a move.
There were concerns it would require investors to sign and return papers about existing investment business, and therefore impose a major new compliance exercise on firms.
But this will not be confirmed until new drafts of MiFID proposals are released.
An update on MiFID comes on the back of recent comments from Callum McCarthy, which suggests many of the MiFID proposals are detrimental to UK financial services business and regulation, because of the onerous requirement to gather “unnecessary” client data.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Julie Henderson on 020 7968 4571 or email [email protected].IFAonline
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From 6 April 2019