ADVANCED

General Client Communications

Communicating with clients under MiFID II is all about investor protection. MiFID II aims to regulate the disclosure of information provided about investments and sets transparency requirements when providing information to clients. Firms should prepare for an evolution of the balanced, clear, fair and not-misleading financial promotions environment which FCA authorised investment firms are already familiar with.

Investment intermediaries will already be familiar with how the Conduct of Business Sourcebook (COBS) sets specific financial promotions requirements when dealing with retail clients; expect this rigorous approach to widen, in some cases, to cover professional clients and eligible counterparties who are now formally recognised as having important information needs as well. This means firms with all types of clients will have to look carefully and critically at how their financial promotions review and approval processes work.

Another important change relates to MiFID II’s requirements to disclose all costs associated with the investment at the outset of the investment and then every year thereafter. This requirement may lead some firms to review their operational and accounting arrangements in order to be able to provide this information. In the lead up to 3 January 2018, communicating information about sophisticated products to clients unfamiliar with these types of products, will put significant responsibilities on investment firms and may lead firms to review how they deploy and use financial promotions within their business models.