Euro battle over RDR commission ban
The European parliament wants to scrap a Mifid II proposal to ban commission for independent financial advisers across the European Union.
European Commission proposals for Mifid II, published in October, would ban commission for advisers operating on an independent basis.
In response to the commission’s plan, published last month, the parliament proposed an amendment requiring advisers to simply disclose any commission to clients.
Cicero Consulting Brussels analyst Tim Gieles says if the parliament’s amendment is accepted, the FSA will need a carve-out to ensure RDR regulations banning commission could continue. He says: “The FSA got a carve-out on the first Mifid and would need a similar one for Mifid II.”
The FSA is confident it will have discretion to continue the commission ban, whatever the outcome of the directive.
A spokesman says: “While Mifid is often described as a ’maximum harmonisation’ directive, it is a directive and not regulation, which means individual countries still have to write their own rules to implement it.
The parliament’s response also puts forward an amendment to remove the obligation for advisers to disclose whether their investment advice is independent.
German MEP Markus Ferber, acting as rapporteur, says advisers should instead “clarify the basis of the advice they provide, notably the range of products they consider in providing personal recommendations to clients, whether the investment advice is provided in conjunction with the acceptance or receipt of third-party inducements”.
EA Financial Solutions managing director Minesh Patel says: “The UK tried disclosure and it was not enough. The RDR commission ban is needed to rebuild trust in our industry.”
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Readers' comments (4)
EA Financial Solutions managing director Minesh Patel says: “The UK tried disclosure and it was not enough. The RDR commission ban is needed to rebuild trust in our industry.”
The thing is, there is trust in our industry. People trust their IFAs NOT the banks. However, the RDR is aimed squarely at the trusted sector and is letting the proven untrusted banking sector off Scott free. Even the EU have decided that commission is not the culprit and the FSA is about to ruin financial planning for the general public in a big way. History will show that RDR will be a disaster. Everyone knows it now and this giant mistake will cost the UK billions again and perhaps the effect of the recent financial collapse will only be the tip if the iceberg! BE WARNED UK!
Dear Minish Patel - I don't agree. What was the objective behind commission disclosure ? What didn't it achieve.
It is the banks that are not trusted. Any mistrust of IFAs has largely and deliberately been generated by a self-interested, arrogant and, I would suggest, pretty incompetent regulatory system.
If the public realised just how much the FSA, FSCS, ICO, a host of other quangos, and the tens-of-thousands of people in various compliance functions, all purporting to protect them, actually costs each and every investor, they would be shocked and annoyed.
Has anyone carried out a proper cost-benefit analysis to determine whether this ever-expanding 'monster' should be killed off before it completely decimates the UK financial services sector.
So the European parliament is suggesting the commission disclosure regime that we have had for years.
Herr Ferber suggests that advisers should “clarify the basis of the advice they provide...etc., etc., again, something that we have been doing for years.
Sorry, Minesh, but “The RDR commission ban is needed to rebuild trust in our industry.” just doesn't cut the mustard. What has destroyed trust in this industry more than anything is attempts by FIMBRA, PIA & FSA over the last 20-odd years to restructure the industry, and failing every time to add consumer confidence: rather, it has ALWAYS had the opposite effect of leavng the public, the Press and Government more confused about this industry than it was before.
The one successful outcome of all these attempts has been TO INCREASE COSTS & CHARGES TO THE CONSUMER.
And now we have RDR.
God help you all.
Roll on retirement.
A bit late, methinks. I was going to say that they've seen commonsense but given the gender directive that would be a stretch.