On 19 April 2018, the FCA published a new update on its website regarding the basic advice regime under MiFID II and the Insurance Distribution Directive (IDD). The update explains the impact of the FCA’s implementation of MiFID II and the IDD. It also directs firms to further information which the regulator has published on providing streamlined advice to consumers.
In terms of MiFID II the FCA explains that the Directive requires it to apply various conduct requirements to Article 3 firms (including suitability requirements) which are ‘at least analogous’ to those which apply to MiFID investment firms. Therefore Article 3 firms can no longer provide basic advice on stakeholder products within the scope of MiFID, under the rules in COBs 9.6. In light of this when an Article 3 firm provides a personal recommendation on a stakeholder product which is also a MiFID financial instrument, that firm must comply with the suitability rules in COBS 9A. The FCA adds that Article 3 firms, like MiFID investment firms, may continue to provide basic advice in respect of non-MiFID stakeholder products such as stakeholder pension schemes. Equally, firms can provide streamlined advice on all MiFID and non-MiFID products.
The FCA also directs firms to its guidance on providing streamlined advice to consumers. The FCA explains that streamlined advice describes advisory services that provide a personal recommendation that is limited to one or more of a client’s specific needs. Streamlined advice does not consider the client’s circumstances which are not directly relevant to those needs.