A law firm has warned that Europe’s increasingly stringent regulations and focus on consumer protection will force investors into “boring” products that pay low returns.
Osborne Clarke head of financial regulation David Blair argues that, taken together, Mifid’s onerous suitability requirements and Mifid II’s proposals for greater standards of care in communicating with professional clients are hampering the competitiveness of the European financial market. He says: “Europe is shooting down the options of what investors can put their money into, which will leave us with some really boring products.”
Blair says there is an economic value to higher levels of participation in financial services markets but believes the EC does not consider this when proposing new rules.
Premier Wealth Management managing director Adrian Shandley says: “When regulations tend to side with the investor, advisers start to gravitate towards low liability products. Unfortunately, increasing regulation will mean advisers will start to look to bland vanilla products with bland returns.”