FSA confident of securing commission ban for all advisers
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The FSA is confident it will be able to impose an RDR ban on commission for all advisers, despite the latest draft of Mifid II focusing its commission ban only on independent advisers.
Money Marketing revealed in September that a leaked draft of the directive stated that independent advisers could not receive commission, with no mention made of other forms of advice. This was confirmed when the draft was published last month.
In order to secure a commission ban for all advisers, as proposed under the RDR, the FSA will need to gold-plate the directive, if this area of the directive is implemented as suggested in the draft.
But speaking at a conference yesterday, FSA director of conduct policy Sheila Nicoll said she was confident the directive would allow the regulator to go further than the rules prescribed by Europe.
Nicoll said: “We are pleased to note the similarities between the Mifid II legislative proposals and some of our RDR requirements. And importantly, we believe that our RDR rules are compatible with the Mifid proposals.
“So, while the Mifid II proposals provide for a ban on commission when firms describe their advice as ‘independent’, the draft directive does not prohibit regulators from going further.”
Regulatory experts have already expressed concerns that as Europe pushes for directives to be implemented on a maximum harmonisation basis, the UK will be left unable to set its own national provisions.
The Treasury has already indicated that it will be lobbying for the wording of the directive to be extended to cover all advisers. The next stage of the negotiation process is at the European Council of Ministers. At this stage the UK will have to contend with other member states’ interests where advisers do not have such a strong presence in the retail mass market, although some states are proposing similar commission bans to the FSA.
Separately Nicoll also discussed the move to the new regulatory framework under the Financial Conduct Authority and the Prudential Regulation Authority.
She said a key issue for the FCA will be tailoring its regulatory approach for different parts of the market.
Nicoll said: “What is right for pure ‘retail’ markets is not appropriate for entirely ‘wholesale’ ones - another way of putting it, as Hector Sants did earlier in the year, is that a distinction can and needs to be made between ‘investor protection’ and ‘consumer protection’. The complexity in particular arises where, for example, products that start off in the wholesale market can and do find themselves in the retail market - recent developments in the Ucits market are a case in point.
“Getting this right will be a key challenge for the FCA, which needs wide debate since it underpins the success of London both as an international marketplace and as a mechanism for providing retail investors with access to a variety of financial products.”
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Readers' comments (29)
Anonymous | 2 Nov 2011 5:46 pm
Self righteous prats!
Once they get into a position of authority it goes to their head and they are believing what they say.
How long before they include furniture, and other such potentially damaging products.
Disney couldn't make it up as well as they have.
What a bunch of idiots,how have we let them get away with it?
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ironman chris | 2 Nov 2011 6:12 pm
to Anonymous @ 5.46 well said
Who said " I wonder do the general public know what the FSA is doing on their behalf" basically they couldn't give a toss it's got nothing to do with the public its about kicking the s--t out of the IFA
A bunch of bullies and cowards
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snooks | 2 Nov 2011 6:25 pm
So let's try and make some sense of what the lady is saying. Let's take this statement
'the FCA, which needs wide debate since it underpins the success of London '
The FCA underpins the success of London does it. Well I'm not sure I have any interest in contributing to the success of London either professionally, politically or in any other way thanks. I knew that we were paying through our fees for the maintenance of a London based club of people on huge benefits to swan about in with grand ideas of themselves. What I didn't realise was that one of them would start thinking they could tell us all that in a bare faced manner. Wow!
The Vatican and the Arcbishop of Canterbury as part of their three pronged plea both ask that retail investors are no longer to be tied into to wholesale arrangements please. Clearly the lady worships at the temple of mamon (in London)
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Dave | 2 Nov 2011 6:26 pm
I'm confident I will win the lottery.......... but I haven't spent other peoples money in anticipation of the event actually happening ! Ironic that not only is the FSA unaccountable to our Parliament they can also ignore Brussel's as well.
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Anonymous | 2 Nov 2011 6:28 pm
What really makes me laugh is the fact that other countries that to date do not have a strict regime and pay commissions,are to be told that the way to do it is the FSA way!!
Is anybody willing to tell them?
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Anonymous | 2 Nov 2011 6:30 pm
They like to gold plate everything, including their pensions.
Maybe they could gold plate the longstop and make it 10 years or maybe we could have the same as the FSA, No Liability at all, even if we are recklessly stupid and grin like cheshire cats because we know we can do what we like and not even parliament can make us stop.
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Anonymous | 2 Nov 2011 6:38 pm
"the man on the street" only will suffer. They will never pay for advice and are happy to buy solutions that pay commission to the seller. The result will be further strain on the social services system and will lead to higher taxes for all to make up for this. I am at a loss as to why MPs cannot see this (other than the fact they are only interested in re-election). The FSA has failed as a regulator - Northern Rock, Lehmans (they shared the same office as the FSA!) etc. Now they are about to fail the British public again.
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Anonymous | 2 Nov 2011 6:48 pm
These self-opinionated idiots have no concept whatsoever of what goes on in the real world...A plague on all their houses...
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Anonymous | 2 Nov 2011 6:58 pm
Rather than banning advisors earning commission, ban ALL product providers and fund managers from paying commission.
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Anonymous | 2 Nov 2011 7:44 pm
I work on a fee basis, but the problem is that I can only deal with people on good salaries. I am grateful to have a niche market to go at.
Normal people ( I include myself in this category) will struggle to pay fees and then pay a monthly premium to some investment/savings/protection product. Most IFAs, not all I must admit, work b++++dy long hours and provide a service that the banks don't. The removal of choice of commission/fees is to the detriment of the adviser and the client.
I fully support the need for Level 4 qualifications but there will be a huge section of middle England that will just not go for fee based advice. Result? No savings for retirement, no family protection, taxed estates etc etc.
The IFA sector will survive, I am sure, but only the rich will benefit in the future.
I am sorry, but this is not right or fair!
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