RegulationJun 7 2019

Adviser remuneration could change after Brexit

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ByDamian Fantato

Advisers should not expect any reduction in standards after Britain leaves the European Union, but remuneration issues could be addressed, according to John Barrass.

The deputy chief executive of Pimfa said advisers were unlikely to see "any great change" if and when Brexit happens.

He said: "It is very important to understand that the vast bulk of financial services regulation coming over from Europe is invented here in the London. We export it to Europe, it gets a European wrapper, applies right across the continent and then comes back here and we implement it.

"We think that in the Mifid, which is the standard that deals with access to retail clients, about 80 per cent of the drafting of that was actually first tried out here in London and then exported to Europe. That's a huge proportion and if you invented it then you are not going to change very much."

But Mr Barrass said it was important that advisers take part in the debate about where regulation should go after Brexit.

He predicted that as part of a "managed divergence" - which would keep Britain's regulatory regime fairly close to Europe's - there could be a "better targeting" of the rules without changing the outcome.

Mr Barrass said: "Where, for example, they have had to average out regulation across 28 member states at the level of the European Commission, in this country you can look at how that applies and think that outcome can be achieved in a slightly more efficient way which is beneficial to consumers by maintaining consumer protection on the one hand but lowering business costs on the other."

He said this could be achieved because the structure of UK retail financial services was "quite unique" when compared to other European countries, which are reliant on banks.

Mr Barrass added: "You might well find that remuneration issues could be looked at, very carefully of course because it is particularly sensitive."