Earlier this month Money Marketing first revealed the strong concern from the EC that the documents were gold-plating the directive and would not be allowed, with high level discussions taking place between the FSA and EC.
The FSA has today said that applications to retain the menu and IDD under Mifid will be withdrawn.
The FSA has also published a report admitting that it found no consistent evidence that the menu had achieved its objectives through reducing commission levels or increasing the share of advice paid for by fee and only limited evidence that the menu had reduced provider bias in sales.
It says it will continue with its post-depolarisation research to look at possible measures that would achieve the objectives of the menu and IDD but this work will not be finished by November 1.
In the meantime, the FSA will implement the Mifid information requirements on November 1, temporarily supplemented by the Menu and IDD as guidance to these rules.
Beachcroft Regulatory Consulting managing director Richard Hobbs says: “This shows the acute difficulties the FSA is facing with regard to European regulation and the fact that the FSA is not in control of its own destiny.”
Aifa director of public affairs Tracey Mullins says: “The FSA has failed to convince the Commission of the genuine benefits of the menu in terms of consumer protection and market transparency. This announcement also raises question marks about a potentially un-level playing field between different types of advice streams.”