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Responding to the Commission call on ‘substitute’ retail investment products, the Joint Associations Committee (JAC) – sponsored by the ESF, ICMA, ISDA, LIBA and SIFMA – underlines that harmonization would impose significant costs, be of limited benefit to investors, and would create avoidable regulatory costs for both the financial services industry generally and consumers.
“We do not perceive that there are significant opportunities for arbitrage between the different regulatory approaches“, the JAC notes.
“If harmonization is considered to be desirable, we believe that any harmonizing measures should be applied as regards the application of suitability and appropriateness obligations arising in the distribution process rather than the imposition of restrictions on products”, JAC states. “In this respect the model provided by the Markets in Financial Instruments Directive appears to us to be the best adapted to the creation of a "product-blind" regulatory structure.
JAC underlines that the imposition of such a structure would result in the creation of competitive inequalities between providers of the various types of products considered in the call for evidence.
This would represent a suboptimal approach as against our preferred option of no regulatory change.