What’s that coming over the hill, c’est un monstre? This is the automatic response from many when they see the upcoming European agenda. But over the coming months, UK-regulated firms are going to have to increase their focus on the ever-looming vision of Europe.
While in the past, Europe has been an amorphous subject for some, the focus and impact are starting to bite into the heart of the IFA world – and the agenda is vast. For example, if the FSA reviewed Icobs, Cobs and Mcob in one sitting, there would be uproar from IFAs, who often advise on insurance, investment and mortgage products.
But at a European level, we are currently witnessing, and are engaged with, the review of IMD, Mifid, Prips and the new responsible lending directive.
These three directives and one initiative span just that breadth. They cover the distribution of insurance products (ranging from motor and house through life and illness to any life-wrapped investment such as a pension or bond) to securities covered under Mifid (collectives to shares) and then all secured lending. And they are all being reviewed or prepared this year.
But there is more – an apparently endless list that seems remarkably like looking into a European mirror on our own home state to-do list. Directives on consumer rights, corporate governance and various guarantee schemes (compensation schemes) are particularly topical, let alone the debate on remuneration models and incentives.
And crucially on top of this, we have the results of the Larosiere proposals. The creation of three new European supervisory authorities means regulated firms will have to look directly to Europe for technical standards and not necessarily to the FSA for guidance and interpretation.
We are entering a new period of regulation, with Europe determined to achieve a single rulebook for financial services through a mixture of maximum harmonised directives and binding standards by the new European supervisory authorities.
This will change the way firms operate, the way the FSA has to influence and the work of trade associations. We are rapidly becoming one voice in 27 and we have a unique market, both in terms of the role and scope of IFA distribution but also the complexity and maturity of our experience.
Brain fried tonight? Well, not necessarily but whether this is an opportunity, a threat or more realistically a mixture of both remains to be seen. And Aifa remains at the forefront of this work. Expect more on this subject in coming weeks and months.
Stephen Gay is director general of the Association of Independent Financial Advisers