Compliance and regulation

We have two services for advisory firms with discretionary permissions:

• Transaction reporting for reportable assets. We undertake transaction reporting to the FCA where the platform is used to hold and instruct on clients’ investments on a discretionary basis, and where reportable investments are made in the discretionary portfolios. Advisory firms are required to enter into a transmission agreement with Fidelity and supply information about the firm, such as their Legal Entity Identifier (LEI) and named decision maker (the individual within the firm who makes the discretionary investment decisions). For us to correctly undertake transaction reporting under the MiFID II regulations, you must inform us of your use of the platform to custody your clients' investments on a discretionary basis where reportable investments are made in the discretionary portfolios.
• Portfolio depreciation reporting. We can produce daily reports on portfolio performance identifying where clients’ accounts breach thresholds that require discretionary managers to inform the client of portfolio reduction. This is available for ISA and Investment Accounts.

What is MiFID II transaction reporting?

Transaction reporting is where we have to report post-trade transaction information to the regulators, providing transparency to help them detect and deter market abuse. MiFID II increases the quantity of data to report and the scope of transactions which are reportable.

Reportable assets, at present, are Exchange Traded Products (ETFs and ETCs) and Investment Trusts.

What are the requirements to invest in reportable assets?

It is your responsibility to carry out the requirements laid down by MiFID II appropriately, in terms of capturing important information on nationality and identifiers for your clients and associated parties. This will enable us to trade in reportable assets on your behalf for your clients.

You must provide us with all nationalities your clients hold and their national identifier. This information is required if a client is executing trades in an exchange traded instrument, that is subject to transaction reporting. To trade on our Pension, this information must be provided for all instructions whether on reportable assets or not. Please note: transactions include buys, sells, regular savings plans, withdrawal plans, dividend re-investments and any fees coming directly from these assets.

Nationality and identification data needs to be provided for the client and any person or entity making an investment decision on behalf of the client – known as the 'decision maker'. For an entity we will need the LEI but will also need details of the individual within the investment firm who makes investment decisions for clients on a discretionary basis. We require the full name, date of birth, confirmation of their reportable nationality and the appropriate national identifier.

Regulatory reporting needs to identify corporate entities and trusts (excluding bare trusts), for clients or decision makers, by means of a Legal Entity Identifier (LEI) as opposed to a national identifier.

Without this information, we will not be able to execute a trade in a reportable asset.

What information is required for non-individual clients?

Most non-individual clients need to obtain and provide a Legal Entity Identifier (LEI).

More information about LEI’s and how to obtain them..†

† ^{By clicking on the link, you will be leaving Fidelity's website. Fidelity is not responsible for the content of external internet sites.}

Bare Trusts are treated in the same way as individual clients rather than non-individual clients and so a LEI is not required. However, the nationalities and national identifiers of both trustees and beneficiaries need to be declared (as per an individual client).

How can I provide Fidelity with the additional client detail?

The following explains how we collect the information:

• It is mandatory as part of all dealing journeys to provide the information when trading on an exchange traded instrument, and for all trades in our Pension
• You can provide details for individual clients outside of a dealing journey within Client Management. To help you identify clients who hold investment trusts or ETFs, please see our 'Account Information’ report, which is available through ‘Manage Reports’ on Client Management. This report is already available to your firm, there is no need to request it
• Information is captured on relevant application forms.

How do I provide Fidelity with Legal Entity Identifiers (LEIs) from advisers and eligible investors?

We have provided the option to accept LEI information within ‘Client Management’ under the 'Manage Client Profile' option. It is mandatory as part of all dealing journeys to provide this information when trading in reportable assets and we capture this information on the relevant application forms. For our DFMs, their relationship manager will be handling their requirements directly. Please note, LEIs are not needed for advisers who only provide investment advice.

How do I provide Fidelity with my firm’s decision maker details?

Unfortunately, at this time we are unable to capture these details online. We can provide a form to you to capture the required information and return to us. However, please be aware that to enable the correct reporting of this information we will require your firm to use our discretionary model portfolio service and to issue you with a new UAN and log-in details.

Why do I need to use model portfolios to correctly report?

The functionality available to support discretionary transactions reportable to the FCA is restricted to our discretionary model portfolio service. Depending on the level of use, we would expect to enhance this functionality in the near future.

How do I set up the discretionary model portfolios and link my clients?

A member of our team will be in contact with you to guide you through this process.

What about the reportable transactions since 3rd January 2018? Have these not been reported (correctly)?

All transactions since the 3 January 2018 have been reported to the FCA but as we did not have/were unable to capture the LEI and decision maker details for your company previously, these details were not included in our transaction report. Upon confirmation from your firm, we are able to re-report these trades with the LEI and decision maker details you provide. Upon confirmation that the current decision maker can be used for re-reporting, we can check for historical transactions made on all clients linked to your discretionary models. The original transaction report will be cancelled and replaced with an updated report to include your LEI and decision maker details.

What if clients linked to the discretionary model portfolio were not historically discretionary clients?

Please notify your contact of any clients who were either non-discretionary during the period from 3 January 2018 to date or who were discretionary from this date but who no longer are (i.e., they are not linked to a discretionary model now). We will endeavour to correct the historical transaction reports to reflect your requirements.

What if the decision maker I have provided for the discretionary model portfolio is not the decision maker for historic transactions?

We require the same name, date of birth, nationality and national identifier details for any previous decision maker. We use these details to re-report the historic transactions back to the 3 January 2018 for all clients now linked to the discretionary model portfolio.

I have self-reported the reportable transactions historically (since January 2018). What do I need to do?

If you have already reported client transactions to the FCA, we will have duplicated the reporting of these transactions and we will have reported incorrectly. Please provide client and transaction details to your contact and we will correct the report(s) we previously submitted. Once your discretionary model portfolios are set-up and in use, please do not provide any further transaction reports to the FCA for your clients.

Why have you sent me a ‘discretionary adviser’ letter? I do not use my discretionary permissions on your platform

Under MiFID rules, the provision of portfolio management services results in the loss of the Article 3 exemption and therefore the firm is categorised as a MiFID investment firm. This results in the firm having to provide transaction reports for exchange traded/reportable transactions unless responsibility is passed to another MIFID entity (FASL) by means of a Transmission agreement. Our Terms of Business have been changed to ensure that all MiFID investment firms enter into a Transmission agreement with us to allow us to report on their behalf. When completing the Transaction report, we have to then provide the LEI (Legal Entity Identifier) of the firm with whom we have entered the agreement as the trade ‘Transmitter’. This field is required for all reportable trades where the adviser is a MiFID investment firm.

How are adviser LEIs recorded?

Adviser Legal Entity Identifiers are stored against the head UAN for the adviser and used in regulatory transaction reporting.

How are eligible investor LEIs for companies, trusts and charities recorded?

Client Legal Entity Identifiers for corporate, trust and charity clients are collected and stored against our client records and used as appropriate in our transaction reporting.

Is it possible for me to run a report of all my clients to show who has provided the additional information?

Yes – our 'Client List' report, which is available online using 'Manage Reports', has been enhanced to indicate whether we hold the nationality and/or national identifier (including LEI) for your clients.

Do you need this information to allow trades on non-reportable investments from 3 January 2018?

For our Pension, we require this information to trade on any asset within the pension. For other account types, we do not require this, although normal anti-money laundering rules will still apply.

Can you clarify your position in respect of whether there are any implications for reporting for pensions under MiFID II?

If an asset held in the pension is reportable, then transaction reporting will be required. Where known, we will report the end owner of the pension as the client for transaction reporting purposes, otherwise the Pension Trustee will be reported with their LEI.

You must provide us with all nationalities a client holds and one of their national identifiers. This information is required if a client is executing trades in any asset within the Pension. Please note: transactions include buys, sells, regular savings plans, withdrawal plans, dividend re-investments and any fees coming directly from these assets.

Annual costs and charges summaries

We send post-sale (“ex-post”) annual costs and charges summaries.

What do clients receive?

Clients receive an annual costs and charges summary, detailing costs and charges applied to their accounts held with us. 

The document contains information on:

• Charges paid to Fidelity for administering their investments
• Investment charges levied by investment managers
• Adviser fees and charges facilitated by Fidelity on behalf of clients and advisers
• The impact of costs and charges outlined above on the client’s investments

You can view individual client's summaries within 'Client Documents'.

Client guide to the annual costs and charges summary.

Which accounts are included in the annual costs and charges summary?

The annual costs and charges summary will show the charges applicable on the following account types:

• ISAs
• Investment Accounts
• Cash Management Accounts

Junior ISAs are also included but are reported separately for the minor who owns the Junior ISA. The annual costs and charges summary are sent to the registered contact.

Joint Investment Accounts are included as a total in the annual costs and charges summary for the Primary Holder only.

Pension accounts are outside of the scope of MiFID and are therefore not included.

How will clients receive their documents?

If a client is registered to access their account information through our website, then we will follow the preference set for the receipt of their Statement and Valuation. Clients can access this setting by logging on to Account Management within the advised client site, clicking ‘My Account -> Profiles -> Preference Centre’. The text on this setting will be changed to ‘Statement and Annual Charges Summary’ to indicate the document is available.

If the client opts for online delivery of this type of document, we will place a copy of the annual costs and charges summary in the client’s Documents area of the website. This can be accessed by clicking ‘My Account -> Documents’. Clients can filter for this document by selecting ‘annual costs and charges’ in the Document Type option. When a new annual costs and charges summary document is placed in the documents section, we will send the client an email notification.

If clients are not web registered, then their annual costs and charges summary will be posted to the address we hold.

Will I receive a copy of my clients' summaries?

You will be able to view each individual client's summary by selecting the 'Client Documents' tab once you have your client in context.

What data is available to advisory firms?

Reports containing this information is available to you within our ‘Reporting services’ area of the website.. The reports are generated monthly and contain a rolling 18 months of data for the in-scope account types. Two reports are available:

• Account level data report
  • The first report allows you to analyse MiFID costs and charges for each account for each month in the rolling 18-month period. This includes adviser fees and charges, our Platform charges and total product charges (aggregated from the investment level report).
  • The account level data also includes a breakdown of start and end valuations, money in, money out and performance return data.
  • There is also a rolling 12-month total for start and end valuations, money in, money out and performance return data including notional growth without charges.
  • The client’s reporting month (the month of the year in which they will receive their annual costs and charges summary) is included in this report. 
• Investment level data report
  
  Investment data is generated at month end, based on both transaction history and calculated values based on fund cost information. Fund cost information is based on holding values held on the last of the month (part months or liquidated holdings are not included), and is therefore an estimate. This is within industry guidelines and regulations.
  
  This information contains:
  • Client, account and investment identification data
  • Month end holdings
  • Entry charges
  • Exit charges
  • Ongoing charges (% and value)
  • Transaction costs (% and value)
  • Performance and Incidental Costs (% and value)
  • Total product charges.

How do you help advisers meet their obligation to provide upfront and ongoing aggregated costs and charges information to their clients? How is this information presented?

We have made the necessary changes to our pre-sales illustrations to include all the additional costs and charges information required. More specifically, to meet the MiFID II goal of increased transparency to clients around the total cost of investing, we have enhanced the pre-sales illustration, which can be generated online to incorporate a number of additional charges, including:

• Fund performance fees
• Fund transactional fees
• Explicit disclosure of a Discretionary Fund Manager fee

In addition, if your clients deal on their own account through our end investor website, they will also be provided with a compliant illustration outlining the charges applicable.

What is the target market framework?

There is a requirement for distributors to formalise the process of identifying the needs and objectives of their clients, in comparison with the characteristics and objectives of the financial instruments being used.

You can find out more in our Target Market Statement.