The future of discount broking could be in doubt if new European Union regulations get the go-ahead.
Under the EU proposals, all intermediaries will be required to carry out a full fact-find for all investment transactions.
These requirements are contained in the committee of European securities reg-ulators' proposal for the harmonisation of business rules.
Trade bodies Apcims and Autif are strongly resisting the proposals, which have also been greeted with dismay by discount brokers.
The CESR met at the start of this week in Madrid, with FSA chairman Howard Davies representing the UK.
The EU super-regulator is made up of financial regulators from all member states and advises the European Commission in the drafting of new rules. The commission has set 2005 as the target for a single market for financial services.
Apcims head of information Brian Mairs says: “The concern is that they are working to what is desirable rather than what is necessary.
“The problem is very different markets and a lack of understanding about how business is transacted in this country. We have proposed a alternative wording which would have a full fact-find at the beginning of the client relationship but not on an ongoing basis.”
Torquil Clark investment strategist Philippa Gee says: “Execution-only business is transacted because the client knows what they want and need a low-cost way of purchasing the product.
“A full fact-find would increase the costs of the transaction and I find this a very strange road for them to be going down.”
An FSA spokesman says: “The ability to offer execution business could be undermined by this directive. We try not to go into discussions with too strong a position but we want an outcome that meets the purpose and is proportionate.”