Will MiFID II effect my pension?
With an estimated 100,000 plus British residents leaving the UK every year and the number still increasing every year. How will MiFID II have effects on your pension? You may already be retired or working offshore, will MiFID II effect you?
What is MiFID II?
MiFID is the Markets in Financial Instruments Directive (2004/39/EC). It has been applicable across the European Union since November 2007. It is a cornerstone of the EU’s regulation of financial markets seeking to improve their competitiveness by creating a single market for investment services and activities. Thereby, ensuring a high degree of harmonised protection for investors in financial instruments.
MiFID sets out:
Conduct of business and organisational requirements for investment firms
Authorisation requirements for regulated markets
Regulatory reporting to avoid market abuse
Trade transparency obligation for shares
Rules on the admission of financial instruments to trading.
On 20 October 2011, the European Commission adopted a legislative proposal for the revision of MiFID. This took the form of a revised Directive and a new Regulation. After more than two years of debate, the Directive on Markets in Financial Instruments repealing Directive 2004/39/EC and the Regulation on Markets in Financial Instruments, commonly referred to as MiFID II was adopted by the European Parliament and the Council of the European Union. They were published in the EU Official Journal on 12 June 2014.
MiFID II improvements
MiFID II will ensure fairer, safer and more efficient markets and facilitate greater transparency for all participants. New reporting requirements and tests will increase the amount of information available, and reduce the use of dark pools and OTC trading. The rules governing high-frequency-trading will impose a strict set of organisational requirements on investment firms and trading venues. The provisions regulating the non-discriminatory access to central counterparties (CCPs), trading venues and benchmarks have also been designed to increase competition.
The protection of investors is strengthened through the introduction of new requirements on product governance and independent investment advice. The extension of existing rules to structured deposits, and the improvement of requirements in several areas, including on the responsibility of management bodies, inducements, information and reporting to clients, cross-selling, remuneration of staff, and best execution.
Effects on your Pension
From the 3rd January, 2018 MiFID II will take effect. It has no direct impact on your pension as an expatriate, however, there is a large emphasis on transparency. Working with a financial advisor, they will have to provide and disclose all fees set out in the transfer and funds.
As an expatriate, your advisor should expect to work on a fee basis structure with proven transparency of the products being provided and offered. Charges within the funds chosen will be disclosed and no further commissions paid to the advisor. This will ensure that as a consumer you are aware what charges you are paying, entry charges and exit charges.
Transparency on the funds and selected companies will be provided to give clear understanding of the products chosen, why they suit the individual and alternatives that could have been used.
If you have previously transferred a pension or thinking of transferring a pension, contact Harrison Brook. Our advisors work on a fee basis and our main priority is transparency. One of our advisors will have a friendly discussion and check that your needs are met now and in the future.