European IFA body confronts EU on commission ‘prohibition’

The European Federation of Financial Advisers and Financial Intermediaries (Fecif) has sent a letter to Michel Barnier, European commissioner for internal market and services, over its “inflexible position” in relation to commission, stating that a blanket ban is “not the answer.”

Vincent Derudder, chairman of Fecif, says in the letter that there is no other example in the past of a “prohibition” imposed by the European Commission to a sector to get a proper remuneration for a job performed under an already extremely strict regulatory environment.

Mr Derudder’s letter says that it is “crucial” the Commission consider regulation of “sales and related conflicts of interest” for “product and/or service distribution”, with a focus on providing equal investor protection “regardless of the type of intermediation they use”.

However, he adds that while “appropriate information” is important to this and that therefore disclosure of charges was key, “over-regulation of a sector already under tough supervision appears meaningless”.

The letter says: “We have proposed, instead of an obviously discriminatory and anti-democratic ban, an obligation of disclosure of the type of remuneration applicable to the transaction and/or the service.

“Such a regulation will protect the consumer against the effect of any potential conflict of interest as there will be no ambiguity regarding the status of the intermediary.

“Ban is not the answer at a time when Europe is facing so many difficulties amidst a growing disaffection of the people of Europe against the consequences of excessive regulation.”