Bankers could get a kicking on Day of the MiFIDs
Ambulance-chasers to target financial firms
Storage Expo Ambulance-chasing lawyers will have a big new target from next month - the financial services industry. So said PJ Di Giammarino, a consultant and keynote speaker at Storage Expo this week.
It's all thanks to MiFID, the Markets in Financial Instruments Directive, a Europe-wide regulation which comes in on 1 November this year. This will allow even retail customers to challenge financial outfits to prove they did their job properly.
"This is Europe's big play to become the most competitive economy in the world by going customer-centric. It's a very clever move by the EU," Di Giammarino said.
"If you make a mistake - for example if you put out the wrong exchange rate and the customer loses money - you could get a kicking," he added, noting though that, oddly enough, customers tend not to complain as much if your mistake means they make money.
"It is a big pain in the neck if you deal with retail customers, and that pain drives on down the chain," he said. "The EU has put the enforcement burden onto customers, but there will also be the ambulance-chasers, looking for a percentage. The foreign exchange market alone is $3 trillion a day, so even a small slice of that is big business."
As well as creating a single market and regulatory regime for financial services, so firms authorised in one European Economic Area country (the EU plus Norway, Iceland and Liechtenstein) will automatically be authorised across all 30 member states, MiFID mandates pre- and post-trade transparency and "best execution".
That means firms will have to collect a lot more information on orders and how they were executed for clients - and that means they are going to need more IT systems and data storage.
"This is already the most information-intensive industry on the planet," said Di Giammarino. "It spends 10 per cent to 12 per cent of turnover on IT, and that could go to 13 per cent or 14 per cent for institutions that don't prepare." ®