New EU legislation for financial markets
31 October 2007
From 1st November 2007, new legislation comes in to force across the EU known as the Markets in Financial Instruments Directive (MiFID), with the aim of providing consistent levels of investor protection for purchasers of investments across all EU member states. Given the standards that we already operate under in the UK, this has resulted in only small changes to the terms and conditions of the James Hay products. There are three changes we would like to highlight:
1. Although we do not anticipate any such event occurring, Clients are entitled to request details of how we would deal with any conflicts of interest that may arise in the course of our administration activities. James Hay's policy will always be to act in the interests of the client.
2. MiFID requires us to review our client classification policy, as the classifications previously used have been changed. Accordingly we have classified all our clients as 'Retail Clients' affording the highest level of investor protection.
3. In addition, we are required to outline our 'Order Transmission Policy' to give a full understanding of the way that we act as a receiver/transmitter of client orders to fund providers.
One further change is the "Appropriateness Test" which is a requirement introduced by the Financial Services Authority in respect of the non-advised sales.
This test is only relevant when a client (who is not receiving financial advice from an authorised financial adviser) instructs James Hay to make an investment in what is defined as a 'complex' investment product (Complex products include anything involving derivatives or where the opportunity to sell is infrequent). In these circumstances, James Hay is obliged to ensure that the client understands the risks involved, and will be seeking further information from the customer about their knowledge and understanding, via a questionnaire. If, however, a client is dealing directly with a duly appointed stockbroker to place trades in, for example, derivatives, James Hay does not need to do this as it is the stockbroker's responsibility.
This Appropriateness Test is available to view and download in our literature section.
If you require more information or would like a copy of the terms and conditions of the James Hay products, Conflicts of Interest Policy, or Order Transmission Policy please contact us on 0845 850 4455.