The Treasury is to modify its proposals for the Sandler suite so they will comply with the Investment Services Directive, according to Ron Sandler.
Sandler told the select committee that he has been reassured by Treasury Fin-ancial Secretary Ruth Kelly's team that it is looking closely at the requirement for inclusion of a suitability test in the range.
Negotiations between British MEPs and representatives from other EU countries ran into trouble last November when proposed amendments to the directive to remove restrictions on execution-only business failed.
Sandler said by focusing on regulating the products rather than the sales pro-cess they can be designed to effectively screen out people for whom they are not suitable in a similar way to deposit accounts.
In its current form, the ISD is a threat to execution-only business that could significantly impact on the cost of Sandler products. Conservative MEP Theresa Villiers has continued to lobby for further changes to the legislation which would exclude specific products and online share trading.
Sandler said: “It is inherently possible to screen out those for whom the products are not suitable. The ISD from Brussels implies suitability at the front end but I am told the Treasury team has invested a considerable amount of time in looking at this and it is now assumed that the ISD will not present a problem.”