View more on these topics

Tory MEP: Labour blamed for EU-wide commission ban failure

EU Flags European Union 480

Conservative MEP and Economic and Monetary Affairs committee member Kay Swinburne says the UK “spectacularly failed” in its negotiations for a Europe-wide ban on commission, blaming the Labour party for a lack of support.

Speaking at a CityUK fringe event on financial services at the Conservative conference in Birmingham this week, Swinburne pointed out that foreign financial advisers working in the UK will still be able to receive commission in certain circumstances under Mifid II rules, despite the RDR.

Last month, the European Parliament backed proposals to allow member states to keep paying commission to financial advisers. There was concern the FSA would have to gain an opt-out to keep the RDR commission ban but the new rules allow the UK and other member states to go further than the EU rules.

If an adviser firm sets up a branch in the UK, under either Mifid or the Insurance Mediation Directive, the FSA’s conduct of business rules will still apply, including the RDR commission ban and rules on independence.

However, if a firm passports into the UK without having a UK branch they are only subject to the rules set by their home state’s regime.

Mifid and the IMD passporting rules do not include all investment products. For example, personal pensions are not in scope so firms passporting into the UK who are seeking to provide pension advice will require a top-up permission, and therefore be subject to FSA rules.

Swinburne said: “Even though we have had the RDR to look at this type of issue for the UK, it does not extend to non-British financial advisers who are operating in the UK so we need to protect our investors. Disclosure is only one step in that direction.

“We have just tried under Mifid II to get amendments through that would ban inducements. Inducements in a British context sounds a really bad thing as it sounds as though someone is being paid to act not in the interests of the client.

“We have spectacularly failed to get everybody across the political spectrum to accept that inducements should not be paid to financial intermediaries for your business. I can tell you that the British Labour party did not support the banning of inducements.”


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm