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Product providers are warned of Mifid sales slump

PricewaterhouseCoopers is warning product providers to expect a significant drop in sales in the final quarter next year as advisers str- uggle to comply with the European Union’s Markets in Financial Instruments directive.

PWC says providers should anticipate a slowdown in business similar to the interruption caused by the introduction of mortgage regu- lation last year.

The European directive, which covers investment advice, comes into force in October 2007. There will be no transition period, although PwC expects the FSA will be “as elastic as it can” and could allow advisers up to six weeks’ leeway to reach full compliance.

Aifa director general Chris Cummings has accused the Government of rushing to implement Mifid, saying other countries are just sitting back and waiting for directives to be implemented in the UK so they can learn from its mistakes.

PwC fears that Mifid will bring limited benefits for the UK retail sector because, unlike other member states, the UK already has conduct of business rules in place.

Cummings says: “The UK is in danger of becoming the test bed for EU direc- tives. We would be happy for other countries to take the lead for once.”

PwC senior adviser, assurance Philip Warland said: “The implementation of the directive will be painful for the IFA community. Having seen what happened around mortgage regulation, we are saying to providers that you may get that fall-off in new business in conjunc- tion with Mifid.”

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