Financial Advice MiFID and IMD Passport

Financial Advice PassportsUnderstanding the Financial Advice MiFID and IMD Passport

Many financial advisers are not authorised directly in the country that you live but are authorised in their host country and allowed under European law to offer advice in other European nations such as Spain. This is known as “passporting” financial advice.

For example a UK financial adviser, provided they have been applied to the UK Financial Services Authority (FSA) and been approved by the FSA can passport advice into Spain. What this means is that it is the UK Regulator that is responsible for policing the activities of your financial adviser and handling any grievance you may have.

This does not mean that all advisers operating in Spain have a ‘passport’. You must check this with both them and their ‘Home’ Regulator.

Types of Passport
There are two types of Passport Authorisation
  1. The Insurance Mediation Directive (IMD) and
  2. The Markets in Financial Instruments Directive (MiFID)

1. IMD Passport (registered with DGS in Spain)
Many financial advisers ‘passport’ advice into Spain under the Insurance Mediation Directive (IMD).

This means the FSA will passport the UK adviser and notify the Spanish Insurance and Pensions Regulator the La Dirección General de Seguros y Fondos de Pensiones (DGS). The firm will be listed both on the FSA and the DGS website as doing this.

a. IMD: Permitted Advice and Arranging Activities
Insurance based products such as:
  • Insurance Policies
  • Life Insurance Investments such as Insurance Investment Bonds
  • Life Insurance
  • Pensions and Annuities

b. IMD: Offices and Advisers Living In Spain
If your adviser is ‘passport’ authorised under IMD they will generally not be living in Spain or have an office or branch but some may do so or try to give the impression that they do. Having an office or branch means your adviser really should be passporting into Spain under MIFID.

2. MiFID Passport (registered with CNMV in Spain)
Some, but not many, larger financial advisers ‘passport’ advice into Spain under the Markets in Financial Instruments Directive (MiFID)

This means the FSA will passport the UK adviser and notify the Spanish Stockmarket Regulator the Comisión Nacional del Mercado de Valores (CNMV). The firm will be listed both on the FSA and the CNMV website as doing this.

a. MiFID: Permitted Advice and Arranging Activities
Stockmarket based products such as:
  • Shares
  • Other stocks such as Government and Corporate Bonds
  • Collective Investments such as SICAVs, UCITS
  • Open Arcitetcure Portflio Investment Bonds

b. MiFID: Offices and Advisers Living In Spain
If your adviser is ‘passport’ authorised under MiFID they are allowed to have a branch of office in Spain.

3. Tax, Wills and Estate Advice

Many advisers may also offer tax or estate and trust planning advice. These activities are not regulated in the same way as pensions and investments. Care should be taken whether you are talking to a UK adviser or a Spanish one to ensure they are competent in tax or estate planning as you have little recompense other than through the UK or Spanish legal systems if things go wrong.

For more information on financial advice passports contact our team.