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MEP asks for Euro probe on validity of RDR

Conservative MEP Ashley Fox has written to the European Commission to query whether the retail distribution review breaches Mifid by imposing stricter requirements on UK advisers than those passporting into Britain.

The MEP for South-west England and Gibraltar says UK investment advisers are subject to the requirements of the RDR whereas other advisers passporting in from Europe are not.

Fox has asked the EC for guidance on whether this breaches Mifid and what the Commission will do to ensure the RDR does not go beyond the scope of Mifid.

Fox says: “We do not want UK financial advisers being put at a competitive disadvantage because regulation has been over-enacted. We cannot have people who qualify in Britain being subjected to one regime and those who passport in being subject to a lighter one.”

An FSA spokeswoman says that the RDR does not breach Mifid and adds that if consumers want an adviser that is subject to the RDR they will be free to choose a UK-based firm.

She says: “Any European adviser that sets up a firm in the UK will need to meet the RDR requirements but if they passport in they will be regulated by their home regulator. We are not concerned that there will not be a level playing field. Consumers will be free to shop around and choose whichever adviser they want.”

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Comments

There are 16 comments at the moment, we would love to hear your opinion too.

  1. Isn’t it wonderful an FSA spokeswoman ‘ probably a 22 year old graduate with years of experience’ is now suggesting that our clients should decide not to use UK advisers if they want one regulated under a different country. When all goes wrong guess which country advisers will pick up the compensation bill you got it—- US

  2. Further to my earlier response isn’t it unbelievable that a spokeswoman at the FSA publicly states that they are not concerned if there is not a level playing field. As I have thought for a long time the FSA is out to ruin the UK financial service industry. She and all the rest should be made redundant as of now

  3. If ever anyone had any doubt as to the FSA commitment to destroying the IFA sector in the UK then this statement of intent puts it in stark context.

    Shocking!

  4. Christopher Bearfoot 22nd July 2010 at 5:23 pm

    The Financial Services and Markets Act 2000 (FSMA) gives the FSA five statutory objectives:

    (1) market confidence – maintaining confidence in the financial system;

    (2) public awareness – promoting public understanding of the financial system;

    (3) financial stability – contributing to the protection and enhancement of the UK financial system

    (4) consumer protection – securing the appropriate degree of protection for consumers; and

    (5) the reduction of financial crime – reducing the extent to which it is possible for a business to be used for a purpose connected with financial crime.

    It is my belief that the FSA __should__ be concerned about a level playing field if they wish to meet their “market confidence” and “public understanding” objectives.

    Furthermore, she fails to explain why / how the UK financial system is enhanced/protected by having different regimes and whether it is RDR or Mifid that actually represents the appropriate degree of consumer protection.

    I’m not holding my breath waiting for clarification….

  5. so let me get this straight. If I set up a firm in the EU (or join a mifid registered firm in the EU) and passport into the UK, I can offer advice in the UK without having to bother about RDR. Does this mean that I can post 2012 recommend products that have in built commission/factoring.

    If this is the case, is it not likely that some enterpising soles regulated in the EU will allow UK adviser to passport in and therefore avoid RDR?

    Seems quite an interesting angle for those who are unhappy with the rdr situation.

  6. Normally when a useless piece of press release twaddle comes out from the FSA the source proudly claims the kudos.

    Why is this source nameless. She should put a name to her malice.

  7. paolo standerwick 23rd July 2010 at 1:30 pm

    Well that settles it then. Many UK based advisers will register outside the UK and passport back in. The the FSA will have no one to regulate, GREAT!

  8. It was my understanding that MIFID had specific “anti-gold plating” rules within it stopping the FSA from imposing additional rules over and above MIFID. I was in competition with a Dutch broker recently. The Dutch broker did not have to declare commissions or provide a suitability report. We got the business but…

  9. Any adviser from the European Union, under Markets in Financial Instruments
    Directive and its trading harmony rules can practice in the UK. This works in reverse and if it is OK for a UK IFA to passport out of the UK to an EU member state then it is OK to passport back in – fater all this is what the EU is all about – freedom to trade across members states. This and means you could go to a country, probably with more balanced regulatory burden and much lower fees than in the UK and passport back in. When you are faced with a fee for the failure of the FSA to regulate Keydata and the IFA court case to fight the regulator over this issue you may think it is justified to ‘passport into’ the UK. For many the UK regulator has driven the independent adviser to edge of an abyss.

  10. Julian Stevens 30th July 2010 at 2:46 pm

    The overwhelming majority of UK consumers neither know nor care about the RDR and will continue to choose an adviser whom they trust and in whom they have confidence.

    In fact, as various other posters have noted, it’s now become almost an embarrassment to have to tell prospective clients that we’re regulated by the FSA, not least because the cost of all these regulatory quangos is such that our services are more costly than if we were regulated by some other authority.

    FSA? Don’t need it, don’t want it, and still less can we afford to go on being bled dry to pay for one barmy, OTT initiative after another based on rigged Cost:Benefit Analyses, not to mention that £305.3m salary bill.

    It’s said that the darkest and coldest hour is the one just before dawn ~ a brighter day beckons. I may just down a drink or two this evening to celebrate.

  11. paolo standerwick 30th July 2010 at 2:52 pm

    Does anyone know someone in the Czech Republic as I believe they have virtually no regulations, are part of Europe, cheap to set up office and register there and then we can all passport back into the UK. We can sell second rate European products if we like and take UK agencies out with UK compamies and under the cross border agreement with Europe and the FSA cannot refuse anyone passporting back in. Anyone interested in taking this further please contact me via my email paolo@mlptwicknemham.co.uk

  12. Neil F Liversidge 30th July 2010 at 3:09 pm

    Any way you slice it, we’re al over regulated, wherever in the EU we are located. I would like to do business in Cyprus but MIFID’s requirements are so onerous it is just not worth it for what would be a relatively small proportion of our business. If there was less but consistent regulation throughout the EU then all consumers would havwe more choice and be better served, but hey – that would probably mean less jobs for regulators! Not much chance of that happening then…

  13. Paolo – http://www.cnb.cz.

    Application for authorisation makes a FormA look like war and peace.

  14. Paolo
    Try Hungary its easier than czech republic

  15. So the FSA has finally come out and admitted that it’s ” not concerned that there will not be a level playing field”. There isn’t a level playing field now ~ never has been, never was going to be. The Barclays/Aviva debacle has proved that beyond any shred of deniability.

    All that’s changed is that someone has broken the FSA’s conspiracy of silence on the matter.

    Whether or not this anonymous spokeswoman was actually authorised to blow the gaff is another matter. She may be getting her P45 in the not too distant future. Then again, if the conversation was neither recorded or overheard, she may just keep her head down and hope that she isn’t found out. What would you do with another nice fat bonus only five months away?

  16. I see last evening on the news that a second new bank has started up in the UK because there is a gap in the market because the UK offering is so bad. Will IFAs go the same way, just because the RDR closes us down? Not because of any other reason? So how could we apply to be regulated outside the UK? It would be good to see the regulator put out of business by the actions of a higher authority rather like they are doing to the IFA sector.

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