MiFID II will have a huge impact on regulated firms when it comes into force in January 2018.
Financial promotions and marketing are two areas where it will have significant implications.
Here we look at the four things Compliance teams should do now to maximise their firms’ chances of complying.
How will MiFID II impact financial promotions?
The Markets in Financial Instruments Directive comes into force in January 2018.
In March 2017, the FCA published near-final details of the new regulation.
You can read more on the directive and its requirements in our blog, MiFID II – what do you need to be compliant?
One of the areas where it will have the most impact is in financial promotions, marketing and customer communications.
How marketing will change under MiFID II
The directive introduces new or enhanced requirements in two main areas.
- the content of financial promotions and marketing material
- the disclosure of fees and charges to clients
Our blog on The impact of MiFID II on financial promotions: what you need to know has more detail on the key changes for marketing communications.
New requirements cover areas including:
- Risk warnings
- Future performance statements
- Enhanced ‘fair, clear and not misleading’ requirements
What four actions should Compliance teams be taking now?
With a wealth of new and enhanced requirements to meet, Compliance professionals and the wider business should start working out how they will tackle the new challenges.
The deadline is now only a few months away. Here is our four-point blueprint for MiFID II action.
1. Make a start
The directive potentially affects all your existing promotional materials.
Working out the scale of the task will involve auditing your existing literature (hard copy and online) to see which of your communications need to be updated.
Identify all your marketing materials, adverts, brochures and other financial promotions. Understanding how big a job you face will help you to allocate appropriate people, time and money to the project.
2. Make sure your approvals process is up to scratch
Using a checklist for approvals can dramatically improve your regulatory compliance. But even if you already use a checklist approach, your list will need updating to reflect the new requirements.
Review existing checklists and identify any updates that need to be made – then make them.
A compliant audit trail, detailing the sign off process, is a key component of the new directive. If your record-keeping processes need upgrading, read our blog on compliant record keeping for advice.
Some firms find that using compliance workflow tools to automate the approval process can help to prevent regulatory breaches. You may want to explore whether automation can help you to mandate approval processes and reduce your chances of non-compliance.
3. Get everyone in the business involved
You and your team are responsible for ensuring that anyone involved in producing promotions is aware of the upcoming changes. Particularly in professional services firms, producing financial promotions doesn’t just fall to the Marketing team. Brochures, whitepapers, online content, articles – marketing communications can be written by a range of people across the business.
Helping your Sales and Marketing colleagues to understand the requirements will enable them to write content you can approve first time – speeding the sign-off process and getting your promotions to market faster.
4. Get on top of disclosure
One of the biggest challenges for many firms will be the requirements around fees and charges disclosure. Significant amounts of data now need to be updated on a regular basis and presented accurately to stakeholders.
The directive provides no set template for displaying this information. While this gives you a certain amount of freedom to interpret the requirements, it also puts the onus on you to ensure that the data is clear, accurate and comprehensive enough to meet the FCA’s standards.
You might want to investigate the potential of online slide libraries. This approach can help by locking down approved content and automatically updating slides with the latest statistics, charts and other corporate information.
How will MiFID II impact your business?
Start with these four areas, and you will be making a good start on compliance with the directive.
Financial promotions, though, is just one element of your work that will be impacted by the new rules.
Our Guide to MiFID II – All you need to know about the Markets in Financial Instruments Directive examines the directive in more detail, and explores the impact it will have across all the operations, processes and systems of regulated firms. The guide is free, and you can download a copy here.