Regulators have grasped the force of the proverb that “He who pays the piper calls the tune”. The MiFID II rules on inducements are the latest in the long running series of regulatory attempts to ensure that it is only the firm’s client who can call the tune played - or service provided - by an investment firm. They impose a new prohibition on investment managers and investment advisers accepting and retaining third party payments or benefits, new rules on investment research and tighter conditions and disclosure rules for all types of investment firm.
The FCA in its third MiFID II Consultation Paper CP16/29 proposes to combine these stricter new rules with its RDR regime, to impose more onerous requirements than are necessary under MiFID II where retail clients are involved, and to extend some provisions to catch collective portfolio managers such as AIFMs and UCITS managers.