View more on these topics

MM leader: Dangers in banning execution-only

The European Commission has reignited old battles by calling for a clampdown on execution-only investment services.

In a consultation paper reviewing Mifid, the EC raises concerns that some investment products are too complex to be offered on an execution-only basis. It is worried the current list of non-complex investments allowed to be sold on an execution-only basis is too lenient and suggests areas of concern, including bond categorisations and certain Ucits investments with “complex investment management techniques”.

The paper suggests one option would be to scrap the execution-only regime entirely, although experts suggest a tightening of current rules is the most likely outcome.

When the Mifid rules were being drawn up, some countries called for a more draconian treatment of execution-only and the UK had to fight hard for the regime to be allowed.

Execution-only brokerages have been a huge success story and account for a considerable percentage of retail investments sold. However, advisers have often queried the breadth of investments offered on an execution-only basis as well as raising concerns that slick marketing used by some firms blurs the line between information and advice.

It is right that the definitions of non-complex investments are reassessed and pleasing to see policy formulation which starts from the position that advice is a force for the good – FSA please take note.

However, in the context of huge numbers of people failing to save adequately for their futures, there are significant dangers in taking a blunt hammer approach to execution-only.

In trying to protect the consumer, European regulators must be aware of the risks of stopping them from engaging with financial services altogether.

Alongside this debate, the industry is still grappling with the concept of simplified advice. The Treasury’s desire to create a successful simplified product regime has put simplified advice back on the agenda after the FSA and industry appeared to have reached an impasse over the idea.

A successful simplified advice service must be about meeting the needs of consumers unable to pay for fully regulated advice and not about the banks flogging high volumes of products through pressurised sales.

We suggest that simplified advice is most likely to work through IFA firms offering layered advice solutions rather than banks looking for a quick profit.



Should IFAs be buying iPads?

If there is one thing that spending 15 years writing about software has taught me, it is that it is important to get over the honey-moon period with any new technology before trying to make an accurate assessment of its benefits. For some years, I have operated a self-imposed, six-month cooling-off period before evangelising products […]

Fidelity FundsNetwork launches CGT reporting service

Fidelity FundsNetwork has launched a capital gains tax reporting service for advisers, allowing them to produce client CGT reports on demand. The service, available now, allows advisers to produce reports on their clients’ CGT positions including unrealised and tax-year specific realised gains. It also allows advisers to deliver bulk snapshot reports or single client reports […]


Nest must engage with the public

There has been a school of thought that believes compulsory pensions are the only way to help Britain avoid the so-called pension timebomb. If your first wage packet has some money taken out of it before it reaches your bank account then you will never know what it is like to have it in the […]


L&G chief wants lenders to stop cutting proc fees

Legal & General mortgages director Ben Thompson has urged lenders to stop cutting procuration fees to avoid further damaging relations between product providers and intermediaries. Barclays, Lloyds Banking Group and The Mortgage Works made changes to their proc fees last month. Thompson says: “In 1995, when lenders starting paying these fees, they did so because […]


Lifetime Isa – how it works

According to George Osborne “people like Isas – because they’re simple”. Fiona Tait is not convinced… Contributions & bonuses What he said: “From April 2017, anyone under the age of 40 will be able to open a Lifetime Isa and save up to £4,000 each year. And for every £4 you save, the Government will […]


News and expert analysis straight to your inbox

Sign up


There are 3 comments at the moment, we would love to hear your opinion too.

  1. There are no dangers in banning Execution Only. Everything is far too complicated for most investors.

    The only way forward is to require everyone to take expensive fee based advice from Q level 6 advisers. RDR is a good start. Remove choice and increase cost. How can the evil of EO be allowed to continue ?

    Banning execution only should only be seen as a start. Eventually everyone would have to take advice and get permission before using their credit cards or signed a cheque – just in case they mis-bought a tin of baked beans or booked an inappropriate holiday

    Then we could move on to banning political parties. People tend to find thinking difficult at the best of times and get confused by the political parties. Far better to remove choice and do what is best for them !!!!!

  2. @John Blackmore

    Absolute twaddle!! There is a huge community of day traders, willing share gamblers and hobby investors out there who would come near an adviser if you paid them….

    Oh..sorry..I get it..tongue in cheek??

  3. The vast majority of people are perfectly capable of buying suitable financial products for themselves, without visiting a financial salesman.

    It seems to me the financial sales industry recognises this, doesn’t like it, and is trying to have people forced to only buy products via a salesman.

    Execution only is a god send for Joe public.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm