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European Commission suggests Mifid II “compatible” with RDR

The European Commission says it expects the RDR to be compatible with Mifid II despite the current draft of the new directive only focusing its proposed commission ban on the independent sector.

In a draft of the directive, published last month, the EC stated that its ban on commission would only extend to independent advisers. This would mean the FSA would have to apply to gold-plate the directive to ensure it can extend its commission ban to all advisers.

In an interview with Financial Times publication Ignites Europe, an official from the EC suggests an RDR ban on all advisers receiving commission would be possible.

The Commission says: ‘While requirements under the new Mifid will have to be implemented on a national level, member states could be able to cater for additional requirements. The approach adopted by the UK does not seem incompatible with the revised Mifid rules.”

Trade bodies and the Treasury have raised significant concerns that Mifid II could undermine the RDR if the UK was unable to extend a commission ban to all advisers.

The UK, Denmark and the Netherlands have all produced their own rules on banning commission which would go further than the wording of the Mifid II directive. Other countries, such as France, are unhappy with the new rules.

Mifid II negotiations will now move to the European Parliament.

Industry experts have previously warned that although the EC may be accepting of the FSA’s RDR case, it may be harder to convince the European Parliament.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Perhaps they mean a commission ban will apply to all UK authorised advisers and firms and NOT to passported in firms.
    Has anyone thought of that? Why shoudl Europe object if it is made harder for UK based advsiers to trade, but EU based advisers cannot be blocked from taking commission……
    It would be a good way for the financial pendallum to move from London/New York to Germany/France wouldn’t it!

  2. In the Late 80’s an act of parliament was passed to protect consumers against bad advice and rogue traders, it was called the financial services act that is why we have the FSA today.
    Over the years the most important people (The Consumers) have been totally forgotten, as the regulators with their fat cat incomes are totally submerged in their own self-importance. When for god sake are the general public going to be told, in a time when they least need it with inflation spiralling, fuel bills out of control, and another recession looming, that they are now going to have to pay for all the advice they wish to seek from an IFA. Are the general public no longer important or have the FSA simply forgotten they exist. A recent survey conducted stated that 85% of the public had not even heard of RDR. Surely if there isn’t some a legal issue here there is most defiantly a moral one when people will wake up on January the 2nd 2013 and ring an IFA for advice and find that they now have to pay fees. Imagine if one day there was a knock at your door, your postman was standing there mail in hand and announced that from now on you can only have your mail if you pay a daily fee???? Tell us FSA, when are the public going to be properly informed and why has all this gone ahead without any public consultation?????

  3. Derek Bradley ceo PanaceaIFA 8th November 2011 at 10:09 am

    The problem is that there is still nothing definitive and all the time advisers have to take aim at a moving target in planning their transition. This issue will no doubt as usual be tailored to suit the French- they strongly oppose, I understand, the Mifid proposals regarding commission payments, saying they do not bring real benefits to investors and on that count they may have a point as the customer attitude to what has been done in their name has not been made too clear with the FSA adopting a stance of telling customers what they will be happy with not what they should be happy with.

    In effect this means that IF those offering restricted advice could still receive commissions along with commissions being paid for execution only business, it has the potential of scuppering the plans for an outright ban in 2015, at the same time creating an unlevel playing field or perhaps another playing field with different markings and a different size ball with different sized teams.

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