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How Prudential is supporting advisers with MiFID II and IDD

 

MiFID II & IDD

From 3rd January 2018, new disclosure requirements came into play for MIFID financial instruments under the MIFID II directive.

Similar requirements, as a result of the Insurance Distribution Directive (IDD), came into effect on 1 October 2018 for insurance based investment products.

Please see our Frequently Asked Questions about MiFID II & IDD disclosure for more information.

Our costs & charges information

Initial (ex-ante) disclosure

As a ‘distributor’ of our products, you need to provide your clients with details of all the costs & charges they’ll incur as result of making their investment. This will include product and fund charges, any additional services charges and your advice charges. You also need to show your client the effect that these will have on any future return.

We provide you with information that is sufficient to meet the product costs & charges element only. You need to let your clients know about any other costs & charges they may incur (in some form of durable medium).

The following explains this in more detail.

  • MiFID II

    Link Fund Solutions Limited (LFSL) is the Authorised Corporate Director (ACD) of the LF Prudential OEIC funds.

    They are not a MiFID firm, and as such do not have any MiFID ex-ante illustration disclosure responsibilities on the OEIC funds.

    They do however provide access to the cost and charges data for all the funds they manage, including the LF Prudential OEICs, in the European MiFID Template (EMT). You can access the EMT on the Link Group website. If your client is investing in LF Prudential OEICs through Link Fund Solutions, you can use the ex-ante information contained in the EMT file to produce your own cost and charges information and ex-ante disclosure document.

    LF Prudential OEIC investments held within the Prudential ISA

    Link Financial Investments Limited (LFI), who are the ISA Manager of the Prudential ISA and responsible for all regulatory and legal aspects of the Prudential ISA, is a MiFID firm and therefore have responsibilities under MiFID to provide ex-ante cost and charges illustrations for investments held within the Prudential ISA, including the LF Prudential OEICs.

    If your client is investing in the LF Prudential OEICs within the Prudential ISA, LFSL provide generic cost and charges documents for each of the LF Prudential OEICs available in the Prudential ISA. You can access these on the Link Group website.

    You may also find it useful to use our ISA Costs & Charges Calculator. It allows you to enter your clients’ proposed investments, including PruFund investments which are subject to the IDD, and your adviser charges. The calculator produces cost and charges information conveniently in one place, which you can use to produce your ex-ante disclosure document for your client.
  • IDD

    The IDD disclosure requirements apply to you if you are involved in ‘insurance distribution activities’; such as advising on insurance-based products. This applies to new business, top ups, fund switches and exercising options under an existing contract in scope of IDD.

    Disclosure documents, such as the PRIIP KID, include all the relevant product costs & charges information required under COBs; however, these documents will not include details of any distribution costs & charges. These will need to be added and disclosed separately in a durable medium.

Periodic (ex-post) disclosure

  • MiFID II


    Link Fund Solutions Limited (LFSL) is the Authorised Corporate Director (ACD) of the LF Prudential OEIC funds.

    They are not a MiFID firm, and as such do not have any responsibilities under MiFID to provide ex-post illustration disclosure on any LF Prudential OEIC funds your client holds directly with them. They do however provide access to the cost and charges data for all the funds they manage, including the LF Prudential OEICs, in the European MiFID Template (EMT). You can access the EMT on the Link Group website. If your client has investments in LF Prudential OEICs through LFSL, i.e. outside of the Prudential ISA, you can use the ex-post information contained in the EMT file to produce your own cost and charges information and ex-post disclosure document.

    LF Prudential OEIC investments held within the Prudential ISA

    Link Financial Investments Limited (LFI), who is the ISA Manager of the Prudential ISA and responsible for all regulatory and legal aspects of the Prudential ISA, is a MiFID firm and therefore have responsibilities under MiFID to provide ex-post cost and charges illustrations for investments held within the Prudential ISA, including the LF Prudential OEICs.

    Where your client has invested in any of the LF Prudential OEIC funds within their Prudential ISA, LFI will send them a costs & charges disclosure document each year. This will provide cost and charges information for all investments they hold in their Prudential ISA, LF Prudential OEICs and PruFund funds. The reporting period will follow the calendar year. Your client can expect to receive this information in the post at the end of the first quarter of the following year.

  • IDD

    For all of our products, your client’s annual benefits statements (ABS) already disclose costs & charges.

    Where your client holds a Prudential ISA

    Where your client has invested in PruFund funds through the life policy, within the Prudential ISA, Link Financial Investments Limited (LFI) will also send costs & charges information annually to your clients. This will meet the ongoing disclosure requirements of product costs & charges under IDD and will provide costs and charges information for all investments they hold in their Prudential ISA, LF Prudential OEICs and PruFund funds.

    Remember that where you are providing an ongoing service, you’ll also need to periodically provide your client with details of other costs associated with services and transactions undertaken during the reporting period, not covered in the disclosures above.

Inducements

You’ll need to let your client know that, although we don’t pay you for recommending a Prudential product, we do offer you other support. This requirement applies for all products falling under MiFID and IDD.

To help you explain this, we’ve created a handy inducements document called ‘How we are supporting financial advisers’. You can download the document here

Remember that you’ll need to make the same disclosure for clients looking to top-up an existing product. 

You can find more information on the disclosure requirements under MiFID II & IDD on the FCA’s website. 

Our target Market Information

As a manufacturer of products and funds which are in scope of MiFID and IDD, we’re required to provide you with target market information for these products.

These documents explain who we believe the products are, and are not, suitable for. Naturally, this is based on Prudential’s opinion and don’t take into account your clients’ individual circumstances.

We provide this information only for products open to new business.

Naturally we want to ensure that our products continue to be sold to their intended target market. Please share any feedback with us via your Prudential account manager. 

To make things simple, we’ve divided this section into ‘MiFID II’ and ‘IDD’.

MiFID II disclosure

IDD Products

Prudential (UK)

Prudential International