The IFA sector has no representation in the European supervisory authority drafting the detail of European regulation for markets and investor protection.
The European Securities and Markets Authority’s stakeholder group is the industry voice within the supervisor. It has representatives from stock exchanges, investment banks, consumer groups and academia but intermediaries are not represented.
Cicero Consulting head of Brussels office Helena Walsh says: “Given the impact their work will have on IFAs and other intermediaries, it is a large community that certainly has a voice in the UK. Why it is not represented is very questionable.”
Esma’s draft technical standards need to be signed off by the European Commission before they become final and it will work on the detail of the markets in financial instruments directive and the packaged retail investment products directive. Both will have major implications for regulation of UK IFAs.
Walsh says a lack of IFA representation could lead to the “nitty gritty” of European financial regulation not taking into account the needs of the sector.
She adds: “Esma does not know a lot about the intermediary world, who is selling what to who, how does that transaction operate. To say that a consumer group which looks at different things like consumer redress can represent that I find quite hard to agree with.”
Aifa policy director Andrew Strange says: “It underlines the Herculean task we have ahead to avoid becoming collateral damage in these things because people do not think about IFAs.”
Esma says it received many applications to join the group and aimed to provide a geographic, gender and stakeholder balance “between financial market participants, employees’ representatives and retail investors and users of financial services”.