MIFID II What is it and how does it affect the client?
Since January of this year 2018 has come into force MIFID II, a revision to the MIFID directive of economic information that was born in 2007, in the beginning of one of the most serious financial crisis that is remembered, with the objectives of achieving a financial system safer, responsible and transparent with a special emphasis on the relationship with customers and that they are duly informed about the products they hire.
The directive is not only updated to correct errors and take as a basis the experience accumulated in the last decade, it also does so due to changes in citizens’ habits and modifications by companies that market financial and savings products, such as growth of online product contracting.
What changes does MIFID II bring?
The new directive seeks to improve the security and transparency of the markets with the objective that investors have greater protection and do so in different ways:
The first is in the extension of protection to more products. Some, oddly enough, were not as structured deposits, others have been developing and growing as the carbon emissions packages.
The second establishes new rules that seek to encourage independent advice when hiring savings and investment products, and does so by forcing them to offer a wide range of products and prohibiting them from accepting economic incentives from the companies that create them.
And to me as a consumer how does it affect me concretely?
The result of this directive will be that this protection is transferred to greater security at the time of contracting a saving or investment product and in the follow-up and information that we have of them through the periodic data that we receive from them.
Likewise, the product will be better defined according to the needs and risk profile of the investor. For example, for those who want to invest in their retirement, you will find in an Insured Provider Plan (PPA) like those of Aegon the right product to get a rent or capital with no risk compared to others in which the investment is risky.
One of the practical applications in which we will see more clearly these changes will be in the questionnaires, focusing on aspects such as the investment objective, the time horizon of the same and what attitude we have against risk .
With all this, the financial institution or insurer will be more clear, detailed and the goals or purposes of the client will be taken into account above all. The consequence is that these in turn will value points such as closeness to the client and good management that will become key aspects in the relationship between them.