The European Parliament has voted against a Europe-wide ban on commission in its Mifid II regulation.
In the vote in Brussels yesterday, the Economic and monetary affairs committee fell short of proposing a commission ban and instead suggested a ban on investment firms remunerating their staff or assessing their performance in a way that might create conflicts of interest with the firm’s clients.
There were concerns that by allowing commission within the EU, the FSA would need to obtain an exemption to ban it under the RDR. In July, the House of Lords European scrutiny committee called on Mifid II to ban commission.
The EP’s proposals also include requiring investment advisers and sales people to possess an “appropriate” level of knowledge of the products.
Firms designing investment products for sale to professional or retail clients must ensure they meet the needs of a defined category of clients. They will also be required to take reasonable steps to ensure that the product is sold to the right kind of client.
Speaking at the Liberal Democrat conference in Brighton this week, MEP and Economic and monetary affairs committee chair Sharon Bowles said the vote will not affect the RDR.
She said: “We can’t just ban certain models in member states because if you throw everything up in the air it creates chaos.
“There is nothing in it stopping us doing the RDR, it is just that the rest of Europe might not be doing exactly the same. It is not mandating commission but because of the maximum harmonisation rules in capital requirements directive IV everyone suddenly thinks there will be regulations, but it will not work that way.”