Even though the transparency requirement in Mifid II goes much less far than the outright inducement bans altready in place in the UK and the Netherlands, FECIF strongly objects to it.
The organisation says the quality enhancement proposal contained in the European Securities and Markets Authority’s (ESMA) consultation on the Markets in Financial Instruments Directive (MiFID) II will “most likely” reduce clients’ access to investment advice. It added that the proposal will also decrease the choice available to clients by discouraging open architecture investments.
In accordance with MiFID II, an investment firm must provide its clients with information on the existence, nature and amount of third party payments received. If the amount cannot be ascertained, the method of calculating it must be disclosed instead. It states that the amount must be disclosed “in a manner that is comprehensive, accurate and understandable, prior to the provision of the relevant investment or ancillary service”.
Reduced alternatives
FECIF chairman, David Charlet, said regulation that could reduce consumer alternatives should be avoided because the European Union is committed to economic growth and enhancing cross-border operations.
Vice chairman, Johannes Muschik added that “more expensive and unnecessarily onerous regulation” will reduce the number of intermediary firms and create a greater financial burden for the social services and benefit systems of members of the European Union.
“The chairman of EIOPA (European Insurance and Occupational Pensions Authority) confirmed last year that he believed in better not more regulation,” said Paul Stanfield, FECIF secretary general. “We are very much in agreement with this concept and hope that both ESMA and the European Commission will take our comments into account in this light.”
FECIF instead suggested implementing regulation which does not “unfairly penalise intermediaries” and treats customers “fairly, transparently, and without conflict of interest”.
MiFID II, which will not be fully implemented until 2016, aims to address the residual effects of the financial crisis by improving financial market transparency and strengthening investor protection within the insurance and investment market.
In May, ESMA began a consultation process on how best to implement MiFID II, marking the first step in the translation of the directive into implementable rules and regulations.
