The FSA has raised concerns about the European Commission’s “two-pronged approach” to delivering its packaged retail investment products initiative, saying it could allow different selling standards across markets.
Speaking at the Chartered Institute for Securities & Investment annual conference in London this week, FSA director of conduct policy Sheila Nicoll said the regulator supports the commission’s aim of creating a level playing field for competing retail products.
But she explained that the commission plans to deliver its Prips initiative through a combination of reviews of Mifid and the insurance mediation directive. Nicoll said: “We do have some concerns over the fact that the commission is wanting to deliver Prips through this two-pronged approach – on the one hand, through Mifid and on the other hand, through the IMD, depending on the product or service that is being offered.
“We fear this could result in divergence, allowing different selling standards to be applied across different markets, which of course would defeat the original objective of the proposals.”
Responding to Nicoll’s concerns, European Commission internal market and services division spokeswoman Chantal Hughes says November’s consultation on Prips was aimed at ensuring stronger consistency and effectiveness in the consumer protection rules applying in the EU retail investment market.
She says: “Consultation responses largely supported the broad approach outlined, including using the Mifid and IMD frameworks as a basis for aligning sales rules for Prips. The commission is now considering responses to the consultation and developing final proposals.”
At the CISI conference, Nicoll also argued that proposals within Mifid to ban inducements only where they are paid to independent financial advisers risk distorting the market and, as a result, the FSA is pushing for a ban on inducements for all advisers.