The introduction of MiFID II has put the issue of ethics back at the forefront of the investment industry, according to a professional body in the UK.
Investment professionals have said they are finding it harder to resolve ethical practices with their business activities in situations involving conflicts of interest.
The CFA UK, which surveyed members on how easy they find it to adhere to the organisation’s ethical code, said this was likely due in part to the revised MiFID regime.
MiFID II, the updated Markets in Financial Instruments Directive, places more emphasis on firms disclosing when there is a conflict of interest. The directive is effective from January 3, 2017.
CFA UK members said they found the CFA Institute’s Code and Standards harder to adhere to in relation to regulations regarding conflicts of interest. These situations can include the disclosure of conflicts, priority of transactions, and referral fees.
Just under 40% said they had found these areas challenging to them personally during the past year.
This represented an increase in concern about conflicts of interest since CFA UK surveyed its membership last year.
The professional body, which gained responses from 531 of its 11,600 members, considers the incoming MiFID II as a relevant factor and Will Goodhart, chief executive of CFA UK, said investment professional needed more guidance.
“As professionals prepare for the activation of the MiFID II regime in January 2018, issues of ethical practices are again at the forefront of the industry’s consciousness. The UK investment sector wants more guidance on appropriate conduct regarding conflicts of interest and we look forward to working with investment firms to help them ensure that their employees meet and maintain high ethical and professional standards.”
The survey found that professionals were finding the code and standards generally easier to adhere to, however.
But professionals also felt that ethics and professionalism should matter to clients when they were considering awarding a mandate and felt that firm ethics mattered less to clients than they should. This suggested, the CFA UK said, that clients should make this more of a priority when deciding whether to award business to firms.
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