MiFID II & Pension

luisamato

Hi all,

I have a question regarding MiFID II and what importance it has on clients with investments held within a pension.

We are currently in the process of producing reports for all of our clients, however i have recently seen some research carried out by the Lang Cat regarding ex-post disclosures. While it seems that most platforms will be issuing ex-post disclosures for all wrappers, it appears that a number of them, including Aviva & OMW will only be covering ISA's and GIA's.

This has now made me question whether we need to issue reports to our clients who only hold pension investments with us.

Can anyone shed some light on this?

Many thanks

arongunningham

Personal Pensions with insured funds in them aren't included.

My understanding, however, is that SIPPs with OEICS are.

We cover everything in the same way, as best we can, to avoid needing to know what should/shouldn't be inlcuded.

benjaminfabi

Hi @luisamato

All* pensions are out of scope for MiFID II and, as I understand it, IDD. (*there are some that are in-scope but don't worry about those.)

For MiFID, this is principally because under the scheme rules of any pension, the member only ever acquires rights in the scheme, not ownership of the underlying funds. See PERG 10.4a and PERG 13.5a

For IDD, it's because the definition of 'insurance-based investment product' excludes pension schemes.

The trustees own and transact the underlying financial instruments on behalf of the member. There is no direct relationship between the client and the fund manager, so MiFID doesn't apply.

But..

You have a client agreement that might outline an ongoing service for which you are being paid. And you obviously have to deliver that service.
COBS 6.1.9 applies to costs disclosure of pensions and the entire of 6.1 also has rules and guidance setting out any obligation to report costs other than at the outset.
COBS 9 will apply if you make any changes to the pension.

So in summary, you have to provide periodic reporting to clients in accordance with any client agreement you have, and it should include some element of costs disclosure and suitability as appropriate, but it doesn't fall under MiFID II or IDD.

If you have a client who only has an OMW CRA you can continue as you were before 3 January 2018 (assuming that was compliant with the existing rules )

I'm going for a lie down.

luisamato

Hi both,

Thanks very much for the information above, it's been really useful.

@benjaminfabi i think you definitely deserve a lie down after that explanation.

Appreciate the help.

Mattclegg

Morning all,

We have some trusts that hold older Offshore Bonds where the underlying investments are held in a General Investment Account on a platform. The platform providers will be sending the charges disclosure statements to the Offshore Bond provider, as they are technically the account holder. However, the bond providers will not be providing MIFID charges disclosure to the trustees as the Bond contracts don't fall under the MIFID rules.

I'm trying to understand where we, as the advisory firm, stand in relation to our requirements to disclosure charges under MIFID II in this situation.

thanks

arongunningham

The only thing you're not going to be able to get are the actual OCFs.

Generally, even when you are looking at a MIFID-applicable product/investment, you're going to struggle with that.

Best endeavours and all that ---- just use the FE Analytics OCFs and get your pounds, shillings and pence that way and you can pretty much do MIFID aggregated charges disclosure on anything.

benjaminfabi

Hi @Mattclegg

The offshore bond is an insurance-based investment product and therefore subject to IDD.

As I understand it, you have no reporting requirements under MiFID II for this investment, regardless of the underlying investments. However, you will have to disclose costs as per COBS 6.1za.11/12/13.

Mattclegg

Thanks Ben, that's a relief!