Massive change in the regulatory environment, largely in the wake of the global economic crash, is continuing to have a huge impact on the sector. The most significant measures include:

The Markets in Financial Instruments Directive (MiFID) is the framework of EU legislation for investment intermediaries that provide services around shares, bonds, units in collective investment schemes and derivatives, and for the organised trading of financial instruments. MiFID is now being revised to improve the functioning of financial markets in light of the financial crisis and to strengthen investor protection. The changes are currently set to take effect from 2018 with the new legislation known as MiFID II – this includes a revised MiFID and a new Markets in Financial Instruments Regulation (MiFIR).

The European Commission’s proposals for a Capital Markets Union (CMU) aims to help businesses tap into diverse sources of capital from anywhere within the EU, and offer investors and savers more choice.

In the UK, the Retail Distribution Review was designed to improve standards of advice and fee transparency, and has changed the way in which fees can be charged by financial advisers. Rather than accepting commission as a reward for recommending or selling a particular financial product, advisers now have to agree a fee upfront.

In the US, the Foreign Account Tax Compliance Act (FATCA) requires foreign financial institutions to report information about financial accounts held by US taxpayers. Following on from this move, the OECD created the Common Reporting Standard which required firms to identify and report the tax residency and related information of individuals and entities in over 100 jurisdictions.


The long-term impact on the UK’s sizeable wealth management industry remains very unclear and much will depend on the eventual terms of the exit.

The short term focus for asset managers following the Brexit vote is likely to be the wider economic impact of the uncertainty on market and currency volatility. But the long-term impact on the UK’s sizeable wealth management industry remains very unclear and much will depend on the eventual terms of the exit.

Particular confusion surrounds how Brexit will affect UK compliance with MiFID II as countries which are not part of the EU – but which want to sell their products and services in the area – must open a branch within EU borders operating in equivalence with European regulatory standards.

A recent report¹ says there are likely to be significant consequences for asset managers and the financial services industry from Brexit as a significant proportion of UK financial services legislation affecting asset managers is derived from EU law. Some of these rules and requirements could fall away automatically following the UK’s exit, although the UK could potentially gain the ability to repeal or modify others.

1 Norton Rose Fulbright: Brexit – the effect on asset and wealth management

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