FSA predicts Europe will follow in RDR footsteps

European countries are recognising the same issues with advisory commission that led to the Retail Distribution Review in the UK and could similarly go beyond the remit of EU rules to issue widespread bans, according to the Financial Services Authority.

In a speech to the British Bankers’ Association conference on the EU’s Markets in Financial Instruments Directive conference this week, David Lawton, acting director for markets at the regulator, commented on the similarities between Mifid II and the Retail Distribution Review.

He said: “While the Mifid II proposals explicitly provide a ban on commission when firms describe their advice as independent, the draft directive does not prohibit regulators from going further.

“The concerns that led us to develop the RDR remain valid in the UK, and may also be shared by some other regulators for their national markets.

“Given this, it may yet prove that other member states are also interested in restricting inducements for all firms that give advice, while remaining in line with Mifid II.”

As well as noting the similarities to the RDR, Mr Lawton also commented on bringing structured deposits within the scope of Mifid II.

He said: “This particular proposal would be a change for the UK, but it is something we support as part of the Commission’s drive to bring consistent selling standards for different retail investment products.”

He added that in the UK the regulator has applied many Mifid standards, but is “disappointed” that the Commission’s Packaged Retail Investment Products initiative looks set to be delivered in a “piecemeal” fashion through MiFID II and the revised Insurance Mediation Directive.

Mr Lawton said that this approach “increases the risk of diverging standards” and he said that the FSA “will continue to press for consistent requirements across the retail investment market”.