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30 October 2012

FTAdviser: FSA gets green light for RDR clampdown


The European Parliament's final version of the Markets in Financial Instruments Directive (MiFID) contains a clause spelling out the fact the FSA can press on with its Retail Distribution Review commission ban.

The final draft of MiFID, agreed by the European Parliament, also bans ‘independent’ advisers from across the EU from taking commission payments, though the UK and EU definitions of independent are worded differently. The eleventh-hour changes will reignite fears that independent advisers in the rest of the EU will be treated differently from non-independent advisers - in spite of months of debating and lobbying on the issue.

The inclusion of these two clauses represents a substantial toughening up of previous versions of MiFID, and is much closer to the original draft. The clause setting out the ability of local regulators to go further in banning commission appears to guarantee that EU legislation will not undermine the RDR in the UK.

The text states that EU members “may additionally prohibit or further restrict the offer or acceptance of fees, commissions or non-monetary benefits in relation to the provision of investment advice”, on top of other disclosure requirements contained in MiFID. This gives the FSA the ability to ban commission payments from providers to advisers, as planned under the RDR. The UK regulator has long maintained that it will be able to continue with these bans - a central element of the RDR - in spite of previous amendments and rhetoric from MEPs denouncing the FSA’s intentions.

Full article



© Financial Times


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