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MEPs vote against Europe-wide commission ban

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The European Parliament has today voted against a Europe-wide ban on adviser commission in Mifid II.

MEPs approved a ban on commission for independent financial advisers but opted only for more transparency for other advisers.

The vote was overwhelmingly passed with 495 MEPs in favour, 15 against and 19 abstentions.

Last month, the Economic and Monetary Affairs committee, a powerful sub-grouping of MEPs, decided against the ban and now the entire EP has rubber-stamped the move.

There were fears that a decision not to ban commission at EU level could scupper the UK’s RDR plans but the FSA will be able to go above and beyond any rules if it wishes to do so.

MEP and ECON chair Sharon Bowles disagrees with the EP position and hopes a ban across Europe will be in place soon.

She says: “Citizens need to be sure they are getting the best advice for them, not being pushed in a direction for the adviser’s benefit. So ultimately, a total ban on inducements has to be the way forward.”

The proposed directive will move into trialogue negotiations between the European Commission, EP and Council of Ministers.

The UK and FSA have lobbied hard to get Europe to follow the RDR and introduce a total ban. Last month, Tory MEP Kay Swinburne blamed the Labour party for the “spectacular failure” as it voted against the moves in its socialist EP grouping.

The European Commission strongly favours a Europe-wide commission ban and is expected to continue to push for it in trialogue.

Earlier this month, European Securities and Markets Authority chairman Steven Maijoor called for the EU to ban commission across Europe.

Bloomsbury Financial Planning partner Jason Butler says: “I don’t think it should be European wide as you need to lead each member state to decide what they think is appropriate. But if someone passports into the UK they have got to follow the rules on commission.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. As European advice is dominated by Banks is this any surprise?

  2. The pragmatic solution 26th October 2012 at 3:57 pm

    This is a very good time for the FSA to make a U turn on commission. Those advisers that were really interested in embracing change will have passed their exams by 31st December.

    By allowing commission to remain, they will be dealing with forward thinking and beter qualified advisers who could then decide whether fees or commission are appropriate dependant on their clients’ profile.

    That way the FSA would be throwing out the bathwater, but keeping the baby!

  3. RDR is now clearly dead in the water, There is no way it will work with the UK banning commission on its own. It will be a field day for European advisers who would be able to sell their products to the public in the UK offering them juicy commission rebates while we are trying to do business by charging fees.
    WE WOULD ALL GO BUST. WAKE UP FSA AND DO THE RIGHT THING NOW!!!!!

  4. @ The pragmatic Solution. I like your thinking however the FSA are unlikely to back down saying that they are simply adding more consumer protection, which is of course a load of b*lls. Protection from what? There will be fewer advisers over the next few years with increased costs which will be passed on and RDR will not make one bit of difference to reduce “detriment”. Anyone, I mean anyone who thinks otherwise is simply deluded. The train crash is coming on 1st Jan and there is nothing to stop it. Those who could stop it dont wish to because those at the top actually believe the BS that comes out of their organisation around what they see as “benefits of RDR” Someone needs to be able to put a single list together of everything that is wrong with the RDR and submit it for urgent attention to TSC, Chancellor and Treasury. They might get some sense about them and atleast slow the rtrains down before the head on collision. On that note, Have a good weekend chaps and chapess’s

  5. @Richard Wright

    Unfortunately that little ring of water surrounding our island means that EU advisers will have great difficulty pasporting into the UK to advise the masses because it has to be done from an EU base.

    The moment an EU firm or adviser sets up a branch (read business location) in the UK then they are subject to UK/FSA rules.

  6. @grey area
    Wrong, EU advisers are getting ready to do exacty that now and they will do it from Germany , Luxembourg,France ect ect. It will be done on that little tool called on-line. We will be charging 3 plus a half and they will be offering huge commission rebate incentives, we wont be able to compete.

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