Interim Financial Conduct Authority (FCA) chief executive Tracey McDermott has warned financial firms not to underestimate the impact of new EU regulations.
In a speech at Bloomberg’s offices in London, McDermott (pictured) said retail firms ‘shouldn’t underestimate’ the impact of the Markets in Financial Instruments Directive (Mifid II) despite significant crossover with existing rules.
‘On retail conduct, we see a very good fit between Mifid’s provisions on product governance, remuneration of sales staff and so on, and our own policy and supervisory work,’ she said.
‘There are significant crossover themes, for example, between Mifid’s product governance rules and our work on structured products.
‘None of which is to suggest that compliance on retail conduct issues will be a stroll in the park. Firms shouldn’t underestimate the extent of the changes involved here.’
The EU rules are due to come into force from January next year, but the European Securities and Markets Authority has tabled a motion to delay their introduction until 2018.
McDermott said she was pleased this delay had been proposed, but warned firms this was not an ‘excuse’ to avoid preparing for changes.
‘The good news is we expect to see a legislative proposal to delay the date of application,’ she said.
‘If there is, however, the purpose will be to allow time for those changes to be made. Not to provide an excuse to reduce the intensity of preparation for implementation.’
The FCA is due to publish a paper on the effects of Mifid II changes in March, amid continuing uncertainty about the impact of the new EU rules on financial firms in the UK.
FCA board minutes published last November revealed there was ‘significant uncertainty’ about the impact of Mifid II on advisers.