What is MiFID II and how will it affect you or your firm?

Here you will find information to help you or your firm fulfil the obligations set out under Articles 24 & 25 of MiFID II which came into effect on 3 January 2018. 

ESMA ‘Final Report: Guidelines for the assessment of knowledge and competence’

The information here focuses on the requirements in three of the main areas detailed in the ESMA Guidelines, namely:

  1. holding an appropriate qualification;
  2. undertaking and being able to demonstrate continuous professional development; and
  3. demonstrating adherence to standards of business ethics.

The CISI looks forward to supporting regulators, members, firms and the wider public (across Europe outside of the UK) in the delivery of these new standards.

The CISI will do everything it can to enable firms to ensure that its staff fully comply with the ESMA Guidelines. We will provide a cost effective and efficient service to enable firms to monitor and measure progress of their staff towards meeting the requirements, as well as offering relevant and timely CPD for individual members.

Background to the regulatory changes

On 17 December 2015 the European Securities and Markets Authority (ESMA) published its “Final Report: Guidelines for the assessment of knowledge and competence”, which addresses the MiFID II requirements set out under Articles 24 and 25. These guidelines will affect staff who, under MiFID II, are defined as either “giving information” or “giving investment advice”.

Who’s affected?

Under the ESMA guidelines, firms will be required to:

  • 1) Ensure that staff providing relevant services to clients are assessed through the successful completion of an appropriate qualification and have gained appropriate experience in the provision of relevant services to clients
  • 2a) Carry out an internal or external review, on at least an annual basis, of staff members’ development and experience needs, assess regulatory developments and take any action necessary to comply with the ESMA requirements. This review should also ensure that staff possess an appropriate qualification and maintain and update their knowledge and competence by undertaking continuous professional development
  • 2b) Ensure that they submit to their regulator, on request, records concerning knowledge and competence of staff providing relevant services to clients
  • 3) Ensure that staff providing relevant services possess the necessary knowledge and competence to meet relevant regulatory and legal requirements and business ethics standards These requirements will be applicable for relevant staff providing either information or investment advice to clients.

These requirements will be applicable for relevant staff providing either information or investment advice to clients.

How can the CISI help firms meet ESMA guidelines?

Under the ESMA guidelines, firms will be required to:

Ensure that staff providing relevant services to clients are assessed through the successful completion of an appropriate qualification and have gained appropriate experience in the provision of relevant services to clients



The CISI offers qualifications appropriate to both Information Givers and Investment Advisers.

Information Providers (UK + Europe)

The below qualifications fully incorporate the ESMA Guidelines for Information Providers.

International Introduction to Investment (Europe, non-UK) Introduction to Investment (UK)
Retail Investment Advisers (UK)

All RDR-compliant qualifications meet the ESMA requirements for Investment Advisers. CISI’s relevant qualifications include:

Investment Advice Diploma (IAD) Private Client Investment Advice and Management (PCIAM) Chartered Wealth Manager qualification
Retail Investment Advisers (Europe, non-uk)

The below qualifications fully incorporate the ESMA Guidelines for Investment Advisers who work with retail clients.

International Certificate in Wealth & Investment Management (ICWIM) International Certificate in Advanced Wealth Management (ICAWM)
Wholesale Investment Advice (UK and Europe)

The below qualifications fully incorporate the ESMA Guidelines for Investment Advisers who work with wholesale clients.

Capital Markets Programme Certificate in Corporate Finance

Historical Qualifications

The CISI’s view is that any individual qualified in an RDR compliant qualification and undertaking relevant CPD would comfortably meet these requirements. In addition the CISI has reviewed its wider portfolio and established which qualifications contain relevant content whilst identifying supplementary learning resources where gaps appear.

Firms may find it harder to establish compliance with historical qualifications and the CISI’s view is that qualifications held prior to the implementation of The Financial Services and Markets Act 2000 cannot be considered to be ESMA compliant. The CISI is happy to give a view on any other historical qualifications on a case-by-case basis and has identified a suite of learning materials that firms may wish to consider for gap fill purposes, although it must be emphasised that ESMA specifically states that “the compliance function should assess and review compliance with these guidelines”.

Appropriate CISI Professional Refresher modules

  • Anti-Money Laundering
  • Client Categories
  • Financial Promotions
  • Inducements and Dealing Commissions
  • Integrity and Ethics
  • Investment Taxation
  • Investment Principles and Risk
  • Market Abuse
  • Retail Investment Advice in the UK
  • Suitability of Client Investments

Registered representatives examinations

The CISI has conducted a review of these qualifications in response to a number of enquiries and Firms may wish to review the following gap analyses where applicable.

Registered Rep Exams vs ESMA Standards for Information providers - 2000 September
Registered Rep Exams vs ESMA Standards for Advisors - 2000 September

Continuous Professional Development (CPD)

Under the ESMA guidelines, firms will be required to:

  1. Carry out an internal or external review, on at least an annual basis, of staff members’ development and experience needs, assess regulatory developments and take any action necessary to comply with the ESMA requirements. This review should also ensure that staff possess an appropriate qualification and maintain and update their knowledge and competence by undertaking continuous professional development;
  2. Ensure that they submit to their regulator, on request, records concerning knowledge and competence of staff providing relevant services to clients

The CISI is able to support firms and regulators in meeting their CPD obligations through the CISI CPD scheme and range of CPD benefits.

CPD Scheme

CPD is categorised as either Structured or Unstructured learning.

Structured

Structured CPD is defined as an activity undertaken for the express purpose of learning.

Examples:
  • Attending CPD events
  • Watching webcasts
  • Undertaking exams/tests

Unstructured

Unstructured CPD includes unplanned activities, where there is no predetermined learning objective and outcome.

Examples:
  • Undertaking research
  • Reading publications

Helping members to maintain ongoing competence is a core principle of the CISI. Our formal CPD scheme, free to all members, is a cost-effective way for firms to prove to the regulator that they are taking responsibility for the continuing competence and development of their employees.

The Institute recommends that members complete a minimum of 35 hours of CPD a year.To enable members to keep a record of their hours, we automatically record any CISI CPD activities undertaken, such as attending events, taking exams and using elearning tools in one centralised record where additional non-CISI CPD hours undertaken can be added. Those who complete the recommended 35 hours will receive a formal certificate.

Find out how to gain CPD with the CISI

CISI Online CPD Record

The CISI has developed its own online system that can be used to record an individual’s Continuous Professional Development (CPD), giving each member an auditable record. There is a Superuser function to make it easy for firms to track, and report to the regulator on, employees’ongoing training and development.

CPD Scheme Superuser Function

We encourage all firms to take advantage of our Superuser function, part of the CISI CPD scheme. This tool enables you to track and monitor the CPD activities of your staff. The individual CPD logs of all CISI members at your firm can be viewed, reports can be generated and bespoke CPD entries can be created and allocated to one or all of your employees’ CPD logs.

To find out more, please contact cpdscheme@cisi.org

Business Ethics – Integrity Matters Suite

Under the ESMA guidelines, firms will be required to:

Ensure that staff providing relevant services possess the necessary knowledge and competence to meet relevant regulatory and legal requirements and business ethics standards

IntegrityMatters Product Suite

The CISI offers a range of integrity products to help individuals meet the business ethics requirements set out under the ESMA Guidelines, see below;

  • Code of conduct - Our Code of Conduct sets out the standards we expect members to adopt
  • IntegrityMatters - an intelligent and tailored elearning tool designed to highlight dilemmas faced at work
  • Interactive Workshops - interactive workshops that explore real-life ethical challenges experienced in the workplace and offers attendees the unique opportunity to vote on how they would respond should they be faced with the challenge
  • Integrity at Work in Financial Services - a collection of case studies which explore and explain a variety of ethical dilemmas
  • Annual Integrity Debate - Held every year, this prestigious event offers a great opportunity to reflect on the nature of our business, hear professionals discuss important issues of integrity and to network with over 300 members
Find out more