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MiFID II: Rules on Tied Advisers

22nd December 2016

FCA Consult upon New Rules on Tied Advisers

The FCA’s Fourth MiFID II Consultation also sets our rule changes that will affect tied advisers.

MiFID II will come into effect on 3 January 2018, and at that time, changes will also be made to the tied agent regime that is currently in place, since it will no longer be optional for member states within the European Union.

Presently, some EU member states do not allow investment firms within in their home states to appoint tied agents, unlike the UK.

This has led to the scenario that a MiFID Investment firm in the UK might have appointed a tied agent within another EU member state, but that tied agent could not be registered in their home Member State itself since some states do not maintain a tied agent regime.

However, under MIFID II, the FCA has advised “it will no longer be the case that tied agents established in other member states might need to be registered in the UK for these purposes, because all member states will be required to maintain tied agent regimes.”

The FCA has now advised that they are proposing to reflect “the technical changes in MiFID II to the tied agent’s regime in [the] rules dealing with appointed representatives”.

In particular the FCA is proposing the following:

• To use new terms to define those new populations of Appointed Representative (AR) to which MiFID requirements relating to tied agents are also to apply. These definitions will be ‘MiFID optional exemption AR’ and ‘structured deposit AR; and
• To Clarify the territorial application of SUP 12 in light of the changes made by MiFID II that means it is no longer optional for Member States to implement a tied agent regime.

The regulator’s consultation has also informed that HM Treasury will extend the regulatory perimeter of the tied agent rules to include certain activities in relation to structured deposits, such as advising and arranging.

Whilst UK firms will unlikely see a significant impact from the tied agent rule changes - since the FCA already requires tied advisors to be registered, however, those that use tied agents in other member states (without a similar regime at present) may do so.

Comments on the FCA’s Consultation in relation to tied agents can be submitted until 17th February 2017.

MiFID II Compliance Support

If you are currently reviewing how MiFID II will impact your business and require support or assistance in planning for MiFID II implementation, please contact our experienced regulatory & compliance support team, who would be happy to help.

Other MiFID articles:

• MiFID II: FCA’s Fourth Consultation
• MiFID II: Pre-trade transparency waivers
• MiFID II Consultation addresses Investor Protection
• Sep16 MiFID II Latest Roundtable
• MiFID Investment Firms Register
• Feb16 MiFID II Roundtable update
• MiFID II for Investment Managers
• MiFID II: FCA Consults upon Secondary Trading of Financial Instruments
• Dec15: Complex Products & Appropriateness Testing under MiFID II
• Oct15 MiFID II: Update on ‘The Road to MiFID’
• Aug15 Update to MiFID II Taping Rules for Financial Advisers
• MiFID II Overview

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