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Suitability, advice standards, non-advised transactions and discretionary management in the EU

two half-days with case studies – for advisers,  discretionary fund managers and compliance staff

 

INTRODUCTION

Course objectives

The role of compliance in the advice process

Benefits of good fact-finding and suitability letters

Risks of non-compliance

MiFID arts 24-25 general principles

 

ADVANCE DISCLOSURE OF THE SCOPE OF THE SERVICE

Choosing clients

Defining terms under MiFID and MiFID Org

 

  • Advice
  • Personal recommendation
  • Execution-only
  • Insistent customer
  • Discretionary fund management
  • Independence
  • Agreeing the scope of advice – full or focused advice

 

Client agreements

Disclosure of charges

Product disclosure

 

PERSONAL RECOMMENDATIONS AND SUITABILITY GENERALLY

 

The general rule and idea

MiFID Art. 25

 

Know your customer

Understanding existing investments and arrangements

Risk-profiling – and the various types of customer and product risks

Partially completed forms

Extent of information to be collected from clients (proportionality)

Reliability of client information

Updating client information

Client information for legal entities or groups

Collecting information about each individual client and assessing the suitability for each individual client

 

Know your product and service MiFID Org Reg, Art. 54

Costs and complexity of equivalent products

Product governance obligations for distributors

Costs and benefits of switching investments

 

Suitability

Understanding the scope of the mandate

Balancing elements with different risk profiles

Use of non-correlated asset types and compliance risks

Mixing investments and protection

Use of platforms

Duty to review existing investments

Leverage

Non-standard assets

 

Particular Product Problems

Analysing funds

Identifying assets and compliance risks

Tax and other wrappers

Uses of derivatives

Absolute return offerings

 

CONSTRUCTING A COMPLIANT SUITABILITY REPORT & OTHER DISCLOSURE REQUIREMENTS

Regulatory requirements – disclosure of mandates and risks and suitability reports

Form – concise, readable, clear

Substance – explanation for why product recommended and disclosure

Live demonstration of such a letter

 

MONITORING ADVICE AND DISCRETIONARY FUND MANAGEMENT STANDARDS

Compliance obligations under SYSC

Core risk management

Competent employee rule

KPIs and management information that is useful

Spotting future problems – indications

Taking action when things go wrong

Get in touch

Contact Adam by e-mail, phone or post at:

E-Mail: adamsamuel@aol.com or adamsamueltc@yahoo.com

Mobile: 07900 248150

The Attic, 117 Priory Road, London NW6 3NN.