Edition 1483
14 July 2018
Edition: 1483

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MIFID II explained by R. C. Brown

by Advertiser, in Profiles · 05-07-2018 15:02:00 · 0 Comments

On the 3 January, this year new European wide legislation called MIFID II came into force with the aim of significantly increasing investor protection.

MIFID II explained by R. C. Brown

Some of the main requirements of this new legislation are outlined below:
A focus on servicing client needs and ensuring investments are suitable to meet client objectives.
A requirement to complete an ‘assessment of the suitability’ of the recomm-endations given to a client on an at least annual basis.
A requirement to provide new clients in advance with a full breakdown of anticipated first year charges and those that they are expected to incur in subsequent years and existing clients with the actual charges incurred once a year.
An increase in the level and frequency of client communication; it will be mandatory for client valuation packs to be issued on a quarterly basis.
These are major steps forward in investor protection, but sadly many clients in Portugal will not benefit from this legislation as few of the financial advisers operating in Portugal are subject to the MIFID II legislation.
The small print in their adverts typically states that they provide investment advice in Portugal under the Investment Mediation Directive (IMD), which is overseen not by the UK FCA, but typically, by the Maltese or Gibraltar financial regulators.
The IMD gives investors little or no protection but more importantly it restricts these advisers to providing advice on only insurance products, typically Offshore Bond investments.
Much is made of the tax benefits of investing through offshore bonds in Portugal, but very little is said about the very high costs of investing through these products. In our experience, in most instances these costs offset any of the tax benefits that one might gain.
Where a recommendation to invest through a bond makes no sense at all to us, is for a QROP or SIPP to invest via a bond. Similarly, there is no benefit for those people who are taking advantage of the Portuguese Non-Habitual Residency (NHR) regime as, in all these instances, investment returns are free from both income and capital gains tax.
RC Brown Investment Management is regulated by the UK’s FCA and operates in Portugal under MIFID II legislation. If you want us to review your existing investment portfolio we are happy to do this for free. For your peace of mind, you know we will provide fair and unbiased advice on your investments.

For further information,
Tel: (+351) 707502535, email: enquiries@rcbim.pt or visit: www.rcbim.pt

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Edition 1483
14 July 2018
Edition: 1483

Read this week's issue online exactly as it appears in print.

Twitter

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