Sweden is set to ban commission paid by product providers to advisers in an effort to curb conflicts of interest and improve financial advice, its financial regulator has said.
Jonatan Holst, spokesman for the Swedish Financial Supervisory Authority, known as FI, said: “We have for a long time been in favour of restricting commissions to ensure that consumers get better financial advice.
“The inquiry has now proposed to the Swedish government that FI should get the nod to formulate how such a ban should be constructed. We are currently analysing the proposal and will deliver our thoughts to the government before the end of March.”
A report published as part of an inquiry set up by the government to look at how MiFID II should be incorporated into Swedish law proposed a ban, but left it for FI to decide how to implement it.
The 789-page report, The Securities Market: MiFID II and MiFIR, looked at the legislative changes required under Swedish law to implement the EU directives and regulation
The report stated: “The Insurance Mediation Directive (IMD), which follows from article 91 of MiFID II, states that member states are allowed to introduce a ban on commission which has been introduced through article 91 of MiFID II.”
Financial advisers in Sweden are regulated by the insurance industry so would be subject to the changes in the IMD.
Lena Falk, deputy general counsel of the Swedish Investment Fund Association, said.“We are positive that a suggested ban does not go further than advice as in the Netherlands and the UK.
“The ban on third-party payments in relation to advice will be in the hands of the financial supervisory authority, so we do not exactly know what the final outcome will be. It is a big responsibility for the FI to make sure that competition and access to advice for smaller investors is still there.”
Following on from the EU Commission’s 2010 consultation to reform the markets in financial instruments directive (MiFID), the Commission published its legislative proposals, (MiFID II) and a new Regulation (MiFIR), in 2011.
The proposals set out a range of reforms to reshape the financial markets, products and services and the relationship between banks and their customers.
The European Parliament endorsed MiFID II and MiFIR in April 2014, and the Council of the European Union adopted it in May 2014.
Both MiFID II and MiFIR came into force in July 2014 and must be implemented by EU member states by January 2017.