The Markets in Financial Instruments Directive II (MiFID II) comes into force in January 2018.
It introduces a number of changes around the creation and distribution of financial products.
Many of the new and enhanced requirements under the new directive are operational. But some impact marketing and financial promotions.
You can read more about the directive and its requirements in our blog, What is MiFID II and what do you need to do to comply.
The MiFID II 'must knows' for Marketing teams
One of the big changes which will affect your team is that, from 3 January 2018, all communications to professional clients will be treated as financial promotions.
This means that they need to meet all the FCA’s requirements and they will also have to be approved by an authorised Compliance Officer.
All professional client communications are now Financial Promotions – so what do you need to do?
The FCA’s rules around financial promotions are much stricter than those around existing customer communications.
If you want a reminder on what constitutes a Financial Promotion, and what this means in terms of regulatory requirements, read our blog on What is a financial promotion?
In terms of the new rules around customer communications – what steps should Marketing teams take to make sure your firm stays compliant?
- Prominence of risk warnings is one key element. Did you know that risk wording needs to be in the same point size as the main text? – small print isn’t allowed. Read more about the regulator’s rules on disclaimers and prominence.
- For both, accuracy is vital. Find out how you can lock down data to make your charts foolproof and other tips for ensuring your presentations are compliant.The way you display data is equally important. Performance data used in charts needs to be displayed differently for retail and professional clients.
- Make sure the language used is suitable for your audience. Get up to speed on the FCA requirements around suitability to make sure your wording is always appropriate.
What actions should you take now?
- If you are currently producing content for professional clients that will be used after 3 January – this needs compliance approval.
You need to work with your Compliance colleagues to understand what content will get signed off and what will be rejected. As a start point, get tips on how to write content your Compliance team will approve.
- Does your team need training? Some Compliance Officers that we’ve spoken to who have started to check content for professional clients have expressed concern that Marketing teams are struggling to create compliant content. Training on what will and won’t be approved can save significant time in future for you and your Compliance colleagues.
Audit your current communications. You might be surprised about where in the firm they are produced. Not all client communications come via the Marketing department.
- Now that they will all be regulated, you need to get a handle on where they come from and make sure they’re produced in a way that meets FCA standards. Find out how to tell if your financial promotions are out of control – and what do to about it if they are.
- Understand how your lead times could be impacted. Compliance teams are expecting a significant increase in workload to cope with the higher volume of promotions. How will this affect your ability to get communications out? Look at ways to improve efficiency.
- Introducing a level of automation can help deliver these efficiency gains. Regulated firms are increasingly adopting marketing automation tools, which can also mandate Compliance approval to ensure no regulatory breaches slip through the net, improve project management and speed solutions to market.
MiFID II will bring a huge number of changes
For Marketing teams, the change in status of professional client communications is likely to be one of the biggest. Act now to ensure you can cope with the increased requirements, workload and risks this brings.
For more on the MiFID II requirements and what you need to do to comply, you can download a copy of our Guide to MiFID II – All you need to know about the Markets in Financial Instruments Directive. The guide is free, and you can get your copy here.
If you want to improve your financial promotions approval process, we can help you. Read more about our Marketing approval software or contact email@example.com if you’d like to discuss your requirements in more detail.
Nothing in this document should be treated as an authoritative statement of the law. Action should not be taken as a result of this document alone. We make no warranty and accept no responsibility for consequences arising from relying on this document.