Local authorities and local authority pension schemes will automatically be classified as retail clients under the Markets in Financial Instruments Directive (MiFID II). They may, however, opt up to elective professional client status if firms are satisfied that they meet the requirements of the FCA’s lighter opt-up tests (which were set out in the FCA’s MiFID II policy document published last month). The Local Government Association, along with industry bodies, has developed a template set of opt-up documentation which deals with the qualitative assessment part of the process (there is also a quantitative assessment).

The FCA’s lighter opt-up tests are welcomed by the industry as they will enable local authorities to access a wider pool of assets.

Firms do not need to wait until 3 January 2018 to carry out this opt-up process.

Read scheme opt-up information.

Read the FCA policy document.