IFAs can continue to sell complex products to ‘intermediate' clients after the Markets in Financial Instruments Directive (Mifid) is introduced because of a loophole created by the FSA.
Law firm CMS Cameron McKenna says the latest proposals from the FSA – Implementing Mifid’s client categorisation requirements – allow individuals currently classified as ‘intermediate’ customers to be ‘grandfathered’ into the ‘professional client’ bracket of Mifid without having to meet any of the new criteria. Intermediate customers include individuals with enough expertise – measured by factors such as net worth and size of their portfolio – to be afforded less protection than ‘private’ customers have. The Financial Service Authority’s paper states: “In our preliminary view, where a...
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