MiFID II will also require “legal certainty” within the customer agreement regarding the services provided, Gurr noted. This means that consultants must verify the agreements reached with the DFM and the client and clearly express their own role in the process. The investment offer is based on behalf of the intermediary entity on one of the platforms with which JM Finn has entered into a DFM agreement. The intermediary is treated as our client and acts as an agent on behalf of the underlying investor – this tripartite agreement allows the intermediary to retain control of the client relationship and asset custody through the platform it has chosen. Under this framework, the client has an agreement on a tripartite agreement, both with the advisor and with the DFM. BCA established the FM Tripartite Implementation Committee (FMIC) in April 2018 to bring together important interest groups such as project owners, FM service providers and professional associations and chambers (TACs). The IMFC will participate in the development of initiatives to improve the performance of facilities management companies (FMCs) and strengthen the sector as a whole. The Tripartite Facility Management Management Committee (IMFC) was established in April 2018. It is composed of representatives of public and private sector developers and owners, FM service providers, professional associations and chambers (TACs) as well as trade unions to develop detailed action plans for the implementation of the strategies identified in the REITM. FMIC`s goal is to evolve the FM sector from a labor-intensive industry to a productive industry that uses data analytics, predictive maintenance, and smart solutions. The consultant already recommends the model portfolio service as part of an agency contract and I fully expect the reporting obligation to be conveyed to the consultants through a review of the terms of the agency contracts. This goes hand in hand with the DFM`s responsibility to conduct an annual aptitude examination, which is also required by Mifid II. The DFM cannot escape its regulatory obligations, which is why the ACF should really follow them if the 10% notification is not sent.
An agency contract is an opportunity for you, as a consultant, to contractually assume responsibility for the notification on behalf of the DFM and to exempt the DFM from any fees if you do not do so. Fines are usually about turnover and solvency, so a fine imposed on the DFM can be much higher than a fine normally imposed on your company. Doing this wrong could be expensive, especially if compensation isn`t limited, and it could even be something you should talk to your professional liability insurers about. The requirement essentially applies to portfolios managed on a discretionary basis. The rules refer to “portfolio management”, which is defined as “portfolio management in accordance with mandates issued on a discretionary client basis when such portfolios include one or more financial instruments”. Despite the reference to “client-by-client”, this applies both to discretionary managed model portfolio services and to traditional, tailor-made discretionary administration carried out through a tripartite agreement. We will come back to model wallets soon. The traditional conception of what a discretionary service looked like was simply that it was a separate nominated account, with a discretionary agreement that allowed the retail manager to carry out investment transactions without having to ask the client`s permission. .