The European parliament wants a proposed ban on commission being paid to independent advisers across the European Union to be scrapped.
The European Commission proposals for Mifid II, published in October, would ban commission for advisers operating on an “independent” basis. In its response to the Commission’s plan, the parliament proposes an amendment so all advisers simply have to disclose any commission.
The Commission’s original proposals raised concerns in the UK from the Treasury and the industry that the directive would have to be gold-plated by the UK to extend the ban on commission to restricted advisers in line with the retail distribution review. An EC official is reported to have said this would be possible.
If the amendment is accepted and becomes part of the directive, analysts suggest the UK would need a carve out to ensure regulations banning commission through the RDR could continue.
The FSA says it is confident it will have discretion to continue its commission ban whatever the outcome of the directive. An FSA spokeswoman says: “While Mifid is often described as ’maximum harmonising’, it is a directive, not a regulation – which means individual countries still have to write their own rules to implement it.”
As rapporteur, German MEP Markus Ferber is guiding the directive through the parliament. His final report includes the amendment. He also thinks using the word ‘independent’ would undermine other types of advice.
It says: “He is not in favour of the proposed new obligation to specify whether the investment advice is independent and if it is based on a broad or a more restricted analysis of the market as restricting the use of the word “independent” may mean that other forms of advice have a negative connotation.”
Cicero Consulting Brussels analyst Tim Gieles says: “The FSA got a carve out on the first Mifid and would need a similar one for Mifid II.”