# The 2018 regulatory landscape – an impending headache for Financial Services Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2017-07-28 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: MiFID II Compliance Challenges for Financial Institutions Meta Description: Discover how the upcoming MiFID II regulations will impact financial services firms and the challenges they will face in achieving compliance. Learn more now. URL: https://financedigest.com/the-2018-regulatory-landscape-an-impending-headache-for-financial-serviceshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/img0297-365-1736843643057-compressed.jpg) **Matthew Bryars,** founder and CEO of Aeriandi In less than a year, a set of radical reforms designed to prevent history from repeating itself will come into force within the European Union (EU). The Markets in Financial Instruments Directive (MiFID) will regulate firms that provide services to clients linked to ‘financial instruments’, from shares to bonds and units.  First introduced as a response to the 2008 financial [crisis](https://www.financedigest.com/six-ways-to-prepare-for-a-personal-finance-crisis.html "Six ways to prepare for a personal finance crisis"), MiFID II will govern everything from derivative trading, to reducing volatility and policing potential conflicts of interest among financial advisers. MiFID II will bring significant changes to regulatory oversight of [financial services](https://www.financedigest.com/trends-in-the-financial-service-landscape-and-the-impact-on-fraud.html "Trends in the financial service landscape and the impact on fraud").  The [reforms necessary](https://www.financedigest.com/french-president-macron-reaffirms-that-pensions-system-reform-is-necessary.html "French President Macron reaffirms that pensions system reform is necessary") to meet the new requirements will not come cheap.  A recent report by IHS Markit and Expand, ‘ [Counting the cost of MiFID II](http://www.markit.com/Company/Files/DownloadDocument?CMSID=72e73e867ded437c88815230c9ba6f74)’, estimated the preparatory cost to the financial services industry to be more than $2 billion in 2017. **The compliance combo** The looming legislation is currently a [concern for two groups within City](https://www.financedigest.com/new-china-covid-rules-spur-concern-as-some-cities-halt-routine-tests.html "New China COVID rules spur concern as some cities halt routine tests") financial institutions – those responsible for the firm’s technology and those responsible for managing the company’s compliance and mitigating risk.  But who would you assume is more prepared?  The answer may surprise you. Achieving compliance will not happen overnight.  Indeed, MiFID II is widely considered to be one of the most sprawling pieces of financial legislation ever devised, and thus it presents numerous challenges.One of which being that recording calls will [become mandatory](https://www.financedigest.com/how-web-3-0-literacy-will-become-mandatory-in-2022.html "How Web 3.0 literacy will become mandatory in 2022") for all areas of financial advice. Asset managers, independent financial advisors (IFAs) and [payments administrators will all be impacted](https://www.financedigest.com/why-it-pays-to-pay-on-time-the-impact-of-delayed-payments-on-supplier-relationships.html "Why it pays to pay on time: The impact of delayed payments on supplier relationships"), as will conversations on both landlines and mobiles.  MiFID II has several record keeping aspects. Anyone making a call where they recommend products or [aim to make a transaction must record that call then store that recording securely for between five and seven years](https://www.financedigest.com/london-takes-aim-at-new-york-with-five-year-financial-plan.html "London takes aim at New York with five-year financial plan"). When you consider GDPR (the EU’s General Data Protection Regulation), which will also come into effect in 2018, the year is shaping up to be an impending headache for financial services [firms](https://www.financedigest.com/prioritising-employee-wellbeing-in-finance-firms-through-learning-and-development.html "Prioritising employee wellbeing in finance firms through learning and development").  Under GDPR, we all have a‘right to be forgotten’ or a right to erasure of all personal information held on us by a particular company.  This places a duty on companies to be able to [quickly access and delete the information they hold on specific individuals](https://www.financedigest.com/zeal-to-move-through-settlements-anew-to-drive-the-individual-quick-freeze-fruits-market.html "Zeal To Move Through Settlements Anew To Drive The Individual Quick Freeze Fruits Market"), on request. **Is preparation afoot?** Aeriandi commissioned a study looking athow preparations and understanding of MiFID II legislation is shaping up.  Carried out in January 2017, the [research shows that managers](https://www.financedigest.com/new-research-suggests-over-13-million-brits-were-inadequately-managed-while-working-remotely-2.html "NEW RESEARCH SUGGESTS OVER 13 MILLION BRITS WERE INADEQUATELY MANAGED WHILE WORKING REMOTELY*") and decision makers within these institutions have little understanding of the severity of potential penalties and are struggling to apply the legislation to their businesses.  Comparing the responses of IT professionals and those responsible for [managing Risk](https://www.financedigest.com/crypto-investors-step-up-risk-management-after-last-years-meltdowns.html "Crypto investors step up risk management after last year’s meltdowns") & Compliance within a business shows, perhaps suprisingly, that IT teams have a better overall understanding of the consequences of non-compliance. 62 per cent of Risk & Compliance managers admitted to not knowing a company can be fined up to five [million euros](https://www.financedigest.com/spains-king-felipe-reveals-2-6-million-euros-in-wealth-in-bid-to-make-royal-house-more-transparent.html "Spain’s King Felipe reveals 2.6 million euros in wealth in bid to make Royal House more transparent") or 10 per cent of annual turnover, compared to only 42 per cent of IT managers and decision makers. **A countdown to compliance** It would appear however, that a countdown to compliance has begun. Organisations are now starting to [invest time and money](https://www.financedigest.com/8-best-passive-investing-ideas-which-can-help-you-make-money-in-2022.html "8 Best Passive Investing Ideas Which Can Help You Make Money In 2022") in preparations.  30 per cent of respondents [say that budget has been allocated this year](https://www.financedigest.com/veterinary-suture-kit-market-will-generate-new-sales-opportunities-in-upcoming-year-says-fact-mr.html "Veterinary Suture Kit Market Will Generate New Sales Opportunities In Upcoming Year, Says Fact.MR") to help with preparations, and more than a third (36%) report that policy and procedure have now been developed. Before MiFID II was announced, few financial institutions had the infrastructure in place to meet the new requirements.  Many are still working on how best to achieve [compliance and are looking to third party solutions](https://www.financedigest.com/compliance-and-traceability-solution-market-growth-future-prospects-and-competitive-analysis-2015-to-2025.html "Compliance and Traceability Solution Market Growth, Future Prospects And Competitive Analysis 2015 to 2025") to increase their call recording and archiving capabilities.  With such widespread implications, companies should already understand the key areas of impact on their [business and be planning the necessary changes](https://www.financedigest.com/unitedhealth-to-sell-change-healthcares-claims-business-for-2-2-billion.html "UnitedHealth to sell Change Healthcare’s claims business for .2 billion").  Many [companies will need to procure and roll out a new set](https://www.financedigest.com/london-set-for-hosepipe-ban-from-aug-24-water-company.html "London set for hosepipe ban from Aug. 24 – water company") of tools and supporting processes to achieve compliance. It seems that for many though, preparations are still at a very early stage.  While IT teams appear to be more aware of the impending headache, ultimately both compliance and IT teams have their work cut out for them. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---