Am I an information giver?

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Imagine you are sitting in a large auditorium waiting for a Portfolio Manager from a large Asset Management firm. He or she is coming to bestow upon you all the wisdom they have about their shiny new fund and why your entire client base should buy it. I bet you think “well, they have been managing billions of assets so far and done a pretty good job, this has got to be worth listening to”. However, I am confident that most of you wouldn’t think to yourself “I wondered if they have been assessed as competent to give me this information’!

Imagine now, you are a large charity waiting for the Marketing/Sales Director of an Asset Management firm to come and discuss their solution for running your money in a segregated portfolio during a beauty parade. You expect him/her to explain how they will manage risk, how the asset class blend will be managed, how they will keep you up to date with developments and the charges that will be applied. Again, would you as the charity be thinking “who has assessed this individual as competent to provide this information?”

I am confident that most of you wouldn’t think to yourself “I wondered if they have been assessed as competent to give me this information’

Captured in both these scenarios is the challenge of “Information Givers”.

RDR highlighted the need for those advising to be qualified to Level 4. Of course, those managing money and not advising have been required to be qualified to level 3 since 2001, but grandfathering for those who entered the market before 2001 still exists. This means there are dozens of Portfolio Managers out there who have no professional qualification and those not advising or managing are not required to have any qualification. However, embedded within the T&C sourcebook TC 1.1.1B since January 2018 is the criteria for the knowledge and competence of all staff giving information as set out by ESMA;

  • understand the key characteristics, risk and features of those investment products available through the firm, including any general tax implications and costs to be incurred by the client in the context of transactions;
  • understand the total amount of costs and charges to be incurred by the client in the context of transactions in an investment product, or investment services or ancillary services;
  • understand the characteristics and scope of investment services or ancillary services;
  • understand how financial markets function and how they affect the value and pricing of investment products on which they provide information to clients;
  • understand the impact of economic figures, national/regional/global events on markets and on the value of investment products on which they provide information;
  • understand the difference between past performance and future performance scenarios as well as the limits of predictive forecasting;
  • understand issues relating to market abuse and anti-money laundering;
  • assess data relevant to the investment products on which they provide information to clients such as Key Investor Information Documents, prospectuses, financial statements, or financial data;
  • understand specific market structures for the investment products on which they provide information to clients and, where relevant, their trading venues or the existence of any secondary markets;
  • have a basic knowledge of valuation principles for the type of investment products in relation to which the information is providedAll of this is a challenge for our colleagues in Asset Management, many of whom had little or no formalised T&C policies. What we do know is that the FCA as part of its supervisory visits post MiFID are asking “How have you assessed your information givers as competent and how are you going to do this annually?” Why focus on this amongst all the other MiFID II related changes? Because similar to the transaction reporting requirements it’s easy to measure – you either have the evidence that you have done it or you don’t.
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Through our award winning training and consultancy partnership FSTP LLP we hope to become a trusted provider of services to client firms across Financial Services. Specialties: Training and consultancy, project and interim management from regulatory issues through to management development and board services. Chartered Member of the Chartered Institute of Securities & Investment

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