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‘Passporting will knock holes in RDR’

Labour MP George Mudie has questioned whether the FSA will be able to impose RDR rules on certain adviser passporting into the UK.

Responding to questioning from Mudie during the TSC’s evidence session on the RDR last week, FSA director of conduct policy Sheila Nicoll said the regulator will apply the RDR rules to anyone trying to avoid them by passporting into the UK.

Mudie said: “But you have to prove they are doing it and that is as hard as proving Hector is doing something deliberately to harm people. Passporting will knock holes in the RDR faςade.”

He also criticised the FSA for not indicating which parts of the RDR rules those passporting into the UK will be subject to.

Nicoll said passporting adv-isers who do not have an office in the UK will need to be authorised in their own country and some of those requirements, which are set out by Mifid, are “more stringent” than in the UK.

Federation of European IFAs chief executive Paul Stanfield says: “I think that might be a red herring, I cannot think of another EU member state with a more stringent authorisation process.”

During the TSC session, FSA chief executive Hector Sants defended moving ahead with the RDR at a time when the European Union is working on the packaged retail investment products initiative. He said “significant” levels of consumer detriment meant it was reasonable to push ahead with the reforms.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. How can you knock holes in a mirage?

  2. The FSA have confirmed they will not be applying the RDR rules to firm’s exercising Article 31 rights in their draft notification to the EC (ref CP09/18 Ann B pars 26 and 51).

    EEA investment advisers will be able to provide investment advice to UK customers under the more relaxed MiFID regime, but UK advisers will be restricted in providing the same MiFID service to their own UK customers.

    The FSA have said that MiFID and IMD do not include all investment products and “top-up” permission would be required via the FSA.

    It is true that if a product isn’t within the scope of one of the single market directives then authorisation / top-up permission for that aspect would be needed.

    However, MiFID and IMD between them cover a range of products sufficient enough for most IFA’s to trade and certainly 100% more than that range of products available to an IFA unable to trade post 2012 C/O The FSA RDR.

    I understand that MiFID covers financial instruments such as securities (shares, units) and derivatives, and IMD covers contracts of insurance, ie, non-investment products such as pure protection but also life policies, personal pension policies, annuities, drawdown and group schemes in each case because of the involvement of the insurer.

    I think that occupational schemes would not be included, and probably not SIPPs and SHPs where the provider is not an insurer.

    I guess most IFA’s could live without these? So there we have it the FSA is The UK advisers BPS (Business Prevention Scheme) applicable only to UK regulated firms and not EU firms.

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