ABI urges govt to reform MiFID II regulation

Written by Michael Griffiths

29/09/2021

The Association of British Insurers (ABI) has urged the government to reform MiFID II regulation in its review of the wholesale and retail investment market.

According to the ABI, this would enable “do-it-yourself” investors and pension savers to get better financial guidance from their provider, so they can be more informed about their investment decisions.

MiFID II, the Markets in Financial Instruments Directive which forms the cornerstone of the EU’s regulation of financial markets, was transferred to the UK statute book when the UK left the EU. The government is currently considering consultation responses on how these rules can be reformed so UK financial services work better for UK consumers and UK financial markets are more competitive internationally.

The ABI has suggested that the Treasury and the FCA should take the opportunity post-Brexit to reform MiFID II and make regulations work better to help UK consumers engage with their pensions and investments.

“The past decade has seen a rapid rise in participation in financial markets because of large numbers of people automatically enrolled into a pensions and digital access to financial markets through investment platforms,” said ABI senior policy adviser and investment platforms specialist, Reuben Overmark. “But navigating the financial world can be confusing for savers with many unsure on the best course of action to take when it comes to their accessing their pensions and choosing investments.”

The trade body is calling for advice and guidance regulation to change so that investment platforms and pension providers can guide customers through the consequences of different decisions they might take in relation to their pension and investments.

To make this happen, the ABI has asked the Treasury to amend the Regulated Activity Order to define what does and does not entail financial advice, or to create a new regulated activity enabling more personalised guidance.

Overmark added: “By reforming the advice/guidance boundary, pensions savers and do-it-yourself investors will be able to get more help and reassurance from their provider on their investment decisions. This means customers can make more informed choices about sustainable income in retirement as well as risks and opportunities in the products they are considering.

“Providers will also be able to reassure customers in times of economic volatility and intervene more strongly to warn customers against scams and dubious investments.”

Related Articles