You may have noticed us referring to ‘new legislation’ and ‘MiFID II’ over recent months (equally you may not!). As this major piece of legislation has been formally adopted from the start of the year, we thought it might be useful to summarise some of the changes we face as an industry and what it means for our clients.
The first thing to say about MiFID (Markets in Financial Instruments Directive) is this has primarily been brought in to deal with banks and the investment industry in response to the 2008 financial crisis, rather than financial advisers. However, we are subject to the same rules on many levels. MiFID does not currently apply to pensions.
The good news is the main thrust of MiFID II is to enhance client understanding and ensure delivery of the best possible outcomes for you, both now and in the future – things that we whole heartedly embrace here at Investing Ethically.
These are some of the changes you will see from MiFID II:
Quarterly statements from investment providers
You will also see more information about ‘aggregated costs’ for the investments you hold. This is one of the larger changes to the rules and is another step to trying to help clients understand the real costs of investing. So future valuations will show not only the Ongoing Charge Figure (OCF) for a fund but it will also show things like transaction costs (which are often in addition to the funds normal operating costs).
Electronic verification of identity
We will be using a clever piece of software which will help us meet our obligations to verify our clients (irrespective of how long we have known them!!). We have found a great piece of technology which limits the check to a soft footprint which has no effect on credit ratings for clients.
Source of funds
Greater disclosure around where a client’s capital has come from.
However, despite all these changes please remember that Investing Ethically represents your interests at all times and never the fund managers – we don’t allow any conflicts of interest to exist between us, our clients, and the investment solutions we recommend. You can therefore have complete confidence in our Independent status at all times.
So why the polar bears? Why not and it’s cold- today (27th February) is #InternationalPolarBearDay, raising awareness about the conservation of polar bears – declared as endangered. Did you know that the hairs on a polar bear’s outer coat are actually hollow – providing better insulation for them.