A Conservative MP has said that its unclear the Mifid rules have helped investors, despite the huge extra cost borne by providers.
Speaking at an event on Mifid II in the House of Commons, Bim Afolami, the MP for Hitchin and Harpenden, said he felt the extra regulation will mean smaller firms are unable to establish themselves in the industry due to cost, reducing the level of competition in the industry.
He said: "Since the financial crisis, the focus of regulation has been on restrictions, and I understand that.
"But that does not de facto make the system better, or the outcome better for the end investors, while it does increase costs for everyone, and acts as a barrier to entry to new firms wanting to come into the market"
Mr Afolami, who previously worked as a lawyer at HSBC, where he was responsible for examining the impact of Mifid on the businesses run by his employer.
He said that when the UK exits the EU, he wanted the regulatory system to be framed so UK financial services were "at the forefront of competitiveness, it is not a given that the City remains at the heart of financial services in the future".
Mr Afolami cited the specific example of the ban on fund houses receiving research for free as an example of where Mifid may be causing harm.
He said it will make it more difficult for smaller companies to raise new finance through share issuance.
Mr Afolami’s comments come after Andrew Bailey, chief executive of the Financial Conduct Authority, warned the industry that there was unlikely to be a significant “bonfire of regulation” after Brexit.
Mr Bailey did indicate that he expected the UK’s regulatory system to change after Brexit, to enable it to be more principles based, and less rules based, as current EU rules are.