The WMA pointed to a number of anomalies within the definition that added to the view that the MiFID II definition was preferable.
“Most stakeholders, such as journalists and consumers, do not understand that the labels do not apply in respect of investment advice on non-retail investment products such as most shares and bonds,” the WMA said, before pointing out that investment advice on such instruments is often a core service offering for most wealth management firms.
It also pointed to the use by many commentators, including the FCA, of the generic phrase ‘IFA’ which further muddies the waters for consumers.
The adoption of the MiFID II definition would, it said, go some way to solving some of these anomalies, but, it added, it would be important for the FCA to adopt a rigorous approach to ensuring that firms met the requirement to assess a sufficient range of different instruments.
On the question of how to develop an independence standard for advice on bonds, shares and derivatives, the WMA said the FCA’s intention to implement a secondary regime for all MiFID II instruments that are not deemed retail investment products that would sit alongside a modified version of the RDR will only increase confusion.
“The FCA’s approach in the DP is illogical and the FCA should adopt MIFIDII in full and not adopt a dual regime which appears to us to be a political expedient to try and justify the flawed approach in the current RDR regime,” it said.
