Getting client communications right for Mifid II
In the last year, I have witnessed considerable debate and conflicting interpretations as to the correct client communication (Illustrations) for MifidII.
The underlying requirement is, however, very simple; that platforms need to provide personalised illustrations which show the full range of charges effecting the product.
Change resources have been put under enormous pressure as the deadline looms over us whilst advisers clamour for the security of a compliant process. Platforms are scrambling to get the essential regulatory requirements in place and in many cases the changes to the illustrations have been minimal and generalised. Come 3rd January we can expect a second scramble to catch up with the detailed personalised requirements detailed in MiFIDII
Article 24(4) from the directive stipulates that those firms that are subject to MiFID have to communicate to potential customers; ‘appropriate details of all costs and charges within good time’. This means that clear communication of distribution costs and charges will have to be included in Platform’s illustrations.
CTC has worked in partnership with major clients to develop a comprehensive MiFIDII illustrations solution. The solution makes setup, maintenance and ongoing change easy to manage whilst creating clear communications for adviser and client.
Ahead of the 3rd January 2018 deadline CTC Elements system will be providing both the point of sale and post sale illustrations that are required. The charges and investment data can be stored and maintained by CTC and the Provider or direct from the data investment provider (for example Funds Library).
CTC can work with Platforms to fully represent the cumulative effect of costs on returns and take a total cost figure that incorporates both the service and product costs as a percentage and a value amount. These calculations are combined with Elements core illustration capability taking all platform fees and charges into account to produce a fully compliant illustration.