Edition 1497
20 October 2018
Edition: 1497

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

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R. C. Brown

by Advertiser, in Profiles · 08-02-2018 14:18:00 · 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.

R. C. Brown

The main requirements of this new legislation are outlined below:

• A focus on correctly servicing client needs and ensuring investments are suitable to meet client objectives.
• A requirement to complete an ‘assessment of the suitability’ of the recommendations given to a client on an at least annual basis.
• A requirement to provide new clients with a breakdown of anticipated first year charges and those that they are expected to incur in subsequent years in advance.
• A requirement to provide existing clients with the actual charges incurred once a year both as a percentage of their initial investment and as a monetary sum.
This sum has to include all of the following: management fees, dealing commissions, transaction taxes (Stamp Duty, PTM Levy etc.), and any product transaction charges (initial charges/dilution levies) and any ongoing product charges (e.g. management charges on the underlying unit trusts or OEICS)
There will also be 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.
In addition, all firms will also be required to inform clients, within 24 hours, if the overall value of the client’s portfolio, as evaluated at the beginning of each reporting period, depreciates by 10% and, thereafter, at multiples of 10%.
These are major steps forward in investor protection but sadly most clients in Portugal will not benefit from this legislation as very few of the financial advisers operating in Portugal are subject to the MIFID II legislation.
In the small print in their adverts, you will see they are regulated to provide investment advice under what is called the Investment Mediation Directive (IMD), which provides none of the protections mentioned above and does not require a full breakdown of costs involved.
This piece of legislation was going to be superseded by a sister piece of legislation to MIFID II called the Insurance Distribution Directive (IDD) in February of this year but this was recently delayed until October this year.
The IDD whilst a step forward does not provide the same level of investor protection and disclosure as MIFID II does.
RC Brown operates in Portugal under MIFID II.

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

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Edition 1497
20 October 2018
Edition: 1497

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

Twitter

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