IMA refutes Mifid II non-Ucits proposals

The Investment Management Association has hit out at Markets in Financial Instruments Regulation Directive claims that all non-Ucits funds are more complex than Ucits-compliant funds.

The Mifid II directive states that most non-Ucits funds are complex making risks difficult to understand for investors and classifies such investments as complex.

The complex classification means stringent appropriateness rules will apply to any investors buying non-Ucits funds.

The IMA says: “The IMA disagrees with Esma’s suggestion that all non-Ucits collective investment funds are complex. Given that many non-Ucits funds are in fact less complex than many Ucits, requiring, as one example, fund platforms to introduce appropriateness tests would be a hugely expensive exercise. 

The IMA adds that national regulators should be allowed to establish test regimes for such funds to assess whether they meet the definition of non-complex instruments.

It also says that when disclosing prices to consumers, backward-looking costs can be measured precisely whilst forward-looking can at best only be estimated because they have not yet been incurred.