There could be “unintended consequences” arising from the MiFID II directive, according to the Tax Incentivised Savings Association.

This might include “reducing the options for the consumer in the range of investment choice”, it said.

Many asset managers, distributors, and firms for whom D2C is important are unaware of the implications, officials at TISA said.

TISA believes that there are particular risks posed by the Directive, particularly around complex products, appropriateness, suitability and product governance.

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Jeffrey Mushens, TISA’s technical director, said: “TISA supports consistency of regulation throughout the retail investment market.

“However, our chief concern is that the practical implementation of MiFID II could result in unintended consequences by reducing the options for the consumer in the range of investment choice and also in the type of provider.
“It could also impact the implementation of new technology by limiting the number of investments available to the consumer to purchase without advice. “This would mean that those who do not want to pay for advice would be particularly affected.

“For the industry, any increase in suitability and appropriateness tests will inevitably lead to higher costs and risk for firms, further adding to their regulatory burden.”

TISA has responded to an FCA discussion paper on the regulations.

The FCA has a duty to implement EU MiFID II Markets in Financial Instruments Directive requirements in the UK. It must decide how it puts the requirements into effect and also whether to extend these regulations to a wider set of products.

Mr Mushens said it was critical that the directive does not extend the scope of complexity to include peer-to-peer loans or default funds for personal and occupational DC pensions or UK listed investment trusts.

He said: “We would like to see more details of the specifics of what product governance the directive envisages and encourage the FCA to revisit its obligations to firms in respect of appropriateness tests."

While the full MiFID II requirements are still to be finalised at EU level, the FCA is seeking early views before it consults more fully later in the year.