FSA chief executive John Tiner has hit out at the European Commission for bringing in the Market in Financial Instruments directive too quickly, describing the move as “insensitive” to firms' needs.
As revealed in Money Marketing two weeks ago, Mifid – also known as ISD2 – could mean that the vast majority of IFAs have to increase their PI cover by around 50 per cent by April 2006.
Speaking at the EU Financial Services Action Plan: Implementation in Practice conference in London last week, Tiner said the speed at which the directive has been implemented shows a lack of sensitivity on the effect it will have on firms in the UK.
Tiner said he was particularly disappointed by the decision to publish Mifid in April rather than capitalise on the accession of the 10 new EU countries and publish it in October. He called for more emphasis to be placed on the cost to individual members with a cost-benefit analysis as an integral part of the consultation process, not justification for regulation already in motion.
Treasury finance, regulation and industry managing director James Sassoon said that although good progress had been made by the UK on the FSAP, it would be wrong to assume that the UK is forging ahead of other states with implementation.
Tiner said: “I have to confess that the cost and savings-related reasons for this seem to pale into insignificance beside the problems that the change causes for finance ministers, regulators and firms alike. This is a lost opportunity and suggests a lack of sensitivity by legislators and their officials of the enormous pressures that firms are under in coping with the weight of new regulations.”