Letter from an EU adviser – The Elephant in the room
Written by Charlie Palmer on 10/08/2018

My job as an EU adviser is to open professional connections across the EU and servicing clients with cross border requirements, safely!

And this brings me to one big Elephant - Independent Investment advice did not exist across the EU until the 3rd January this year.

Ah ha you say, yes it does, I have dreamed about such a thing for some years now, gone through RDR, read the bible of the fca gods and recently implemented the last EU bible as directed to me from the FCA, MiFIDii.

A little background – Once upon a time there was something invented by the EU gods, ESMA (https://www.esma.europa.eu/) and EIOPA (https://eiopa.europa.eu/) , which led to the production of rules and laws and regulation and directives in two arenas 1) Investment (MiFID) and 2) Insurance (IMD).

The EU gods promptly passed down the new way of life in our industry to all EU national bodies, by example the FCA.  The national bodies decided what to do with these – noting regulations must be passed through to the industry and Directives are at the discretion of the National country regulator.

In the case of the FCA, they decided to amalgamate MiFID and IMD, producing their version of advisory licences which included both EU licences – hence the flowering of the UK adviser, be they tied or Independent.

Back now to the above statement ‘did not exist across the EU’. Yes the FCA invented the idea of independent advice as did one or two other EU countries. HOWEVER, that was limited to being under the local regulator. ESMA HAD NO SUCH DEFINITIONS or RULES etc  That changed on the 3rd of January this year – MiFIDII. 

ESMA now defines Independent Investment advice – see https://www.templar-eis.com/wp-content/uploads/2017/01/Consumer-benefits-of-MifidII.pdf 

Now– back to ESMA and EIOPA, think of them as two big columns of laws and regulations. One for investment and one for Insurance – and remember they are the gods of your national regulatory gods.
Most all of the EU did not amalgamate these MiFID Investment (From ESMA) and IMD Insurance (From EIOPA) licences. Hence of the approximate 695,000 advisory licences in the EU, 595,000 are insurance only.   Put bluntly, most advisers are insurance only advisers.  Not so many advisers are Investment advisers as defined under MiFID.

Having said that, EIOPA and their IDD implementation later this year has carved out some MiFID investment advisory rules across and into the Insurance column of rules, meaning an adviser carrying an insurance licence only can provide and take responsibility for investment advice within an insurance based product e.g Offshore or local national life company Investment bond.

As with MiFiD II, Insurance advisers will now have to choose for the first time later this year between being an Independent adviser or a non Independent adviser.  

Fund structures in recent years have been floated down to all from  the EU, resulting in funds that can be advised upon/distributed to all the citizens of the EU.

Licences in investment and or insurance can be passported across borders, thus enabling the delivery of advisory services from one country to another. Yes terms apply, but importantly, dare I say it – Free trade between EU members is in play in this arena.

And of course back to ESMA and MiFIDII – defining what Independent Investment advice is IN ALL COUNTRIES OF THE EU, from 3rd of January this year.

From the UK, have you ever looked across the choppy waters and thought ‘too rough for me’ or those people on the opposite shore look a little ragged? or simply not been able to understand the language south of Dover?  Well, from the 3rd of January this year, we are wearing the same suit as you do and are walking the same walk.  In other words ‘ the door is open to professional connections across the EU ’ 

See https://www.templar-eis.com

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