One of the first misconceptions I am often presented with is that Aifa’s engagement at a European level is a tacit support for European integration.
Regardless of personal beliefs, the European Commission’s raison d’être is to create a single market for financial services, aspects of which will benefit UK IFAs and aspects which will not. Aifa’s role is to understand and influence this for the benefit of our members.
Given this drive to a single market, it is important to work at a European level and not live in a UK bubble. We can often exert more influence before publication of a directive than when it is being enacted in the UK.
Take the packaged retail investment products project which, six months ago, hardly anyone had heard of. Now, because it forms such a key part of the retail distribution review and because of the impact it could have on charging, Prips is an acronym on many people’s lips. Because it was clear that this work would be so important, Aifa has been closely engaged with it since early 2008.
The reach of European regulation is extremely wide, which can make the agenda unwieldy to manage but we can identify key issues in Europe today which could have the biggest influence on the UK.
First, the insurance mediation directive, which regulates sales and advice, is being rewritten. This will have a direct impact on the sale of insurance products, including pensions, bonds and other life-wrapped investments. This work will also feed into work on Prips. Whether we will get a new IMD and Prips or whether this is an opportunity to carve out insurance-based investment products from IMD altogether remains to be seen. Either way, a rewrite of IMD will not limit its impact to pure protection insurance.
The combined work on these directives may also lead to a review or rewrite of Mifid. There is simply no way that half of the investment market (IMD-type products) can be amended without changes to non-IMD products so in this case we would be talking about amendments affecting all life and investment products. That is before we even start considering the upcoming mortgage directive.
European regulation is such a huge issue that one column cannot do it justice. For that reason, Aifa will this week publish its first European newsletter, looking at the jigsaw of directives in more detail. It will then publish directive-specific updates throughout the year to help inform members of the changes and the work Aifa is doing to exert influence on their behalf.