As the investment industry enters the final phase of preparation for the implementation of PRIIPs and MiFID II in January 2018, FE, a leading provider of data-driven solutions to the financial services industry, urges affected firms not to neglect their client reporting requirements in the rush to meet other aspects such as trade reporting and unbundling the costs of investment research.
MiFID II and PRIIPs both go live at the beginning of 2018. From then, investors must be given a projection of all costs and charges of the products by the product manufacturers, advisers or the platform before they invest. If applicable, they also need to receive a PRIIPs Key Information Document (KID) at the same time.
However, MiFID II is much more extensive than this as Mikkel Bates, regulatory consultant at FE explains: “Market participants need to deal with lots of issues, such as trade reporting and unbundling the cost of research from commission payments. Many fund groups and distributors have substantial project teams working through the requirements of PRIIPs and MiFID II, but we are reminding all of them that they can’t afford to leave their client reporting to the last moment.
“It’s a very simple formula: from next year, no pre-sale reports equals no sales. The regulators may be gentle in the early days with groups that are making good progress but don’t have all their ducks in a row, but the situation is binary in respect of client reporting."
Earlier this year FE released a whitepaper, which summarises the client reporting requirements which affect fund managers, platforms, discretionary managers and financial advisers under both MiFID II and PRIIPs, and outlines the scope of each piece of legislation.
Key Client Reporting Obligations:
- By 31 December, managers must have posted their PRIIPs KIDs – prescribed, generic pre-sale documents about their funds and/or products – on their website and anywhere else they may be needed. Because these require fund/product data and some complex calculations, they need to have made significant progress by now.
- MiFID II – as well as the pre-sale reports, annual post-sale costs and charges reports and quarterly valuations must be provided to existing clients, all with information from fund managers, distributors and any platforms involved. Ad hoc reports are also needed for discretionary portfolios if the value falls by 10% between quarterly valuations.
- Although the latest Q&As from ESMA, the European regulator, have thrown open the question of when the first post-sale reports are expected to go out, there is no doubt that firms need to start collecting data by 3rd January 2018.
FE’s Regulatory Data Services is designed to alleviate some of the data challenges that asset managers, platforms and life companies will face in meeting their PRIIPs and MiFID II regulatory obligations. The solution consists of data collection, validation, undertaking complex calculations, data dissemination, and document production and distribution.
For more regulatory data insight and opinion, please visit FE’s Regulation Barometer.