European Securities and Markets Authority chairman Steven Maijoor has weighed into the Mifid II debate by backing proposals for a Europe-wide commission ban.
Speaking at the British Bankers’ Association annual conference in London last week, Maijoor said commission leads to unsuitable products being sold.
ESMA is responsible for ensuring financial stability and enhancing investor protection across the EU. It implements regulation from the European Commission.
The EC has proposed a ban on commission but last month the European Parliament voted to allow exceptions in certain countries, which will lead to a battle in trialogue.
At the Conservative party conference in Birmingham last week, MEP Kay Swinburne blamed Labour for the failure to get agreement on a Europe-wide ban in the EP.
Maijoor said: “I firmly believe that the problem cannot be solved by yet more transparency alone. I fully support the ban on inducements in certain situations as included in the proposal by the EC for Mifid II.
“At a minimum we need to ban inducements in the case of discretionary portfolio management and when an adviser wants to use the independent label.”
Maijoor also hit out at sales incentives at banks for creating conflicts of interest, saying they are “different sides of the same coin”.
He said: “When offering a range of products, advisers within a bank might be tempted to be biased towards their in-house products or to those in-house products with a higher benefit to the bank.
“To address this risk we should not only look at inducements, but also look at the remuneration of advisers and sales staff in financial institutions as I see inducements and remuneration as different sides of the same coin.”