news & lobbying

MiFID 2 Still Contradicts RDR On Commission.

Published yesterday, the latest draft rules for MiFID 2 still appear to support the fact that tied and restricted advice will be allowed to take commission on advice but independent advice will have commission banned.

We suggest this is possibly a contradiction as to how advisers are to remunerated and leads to a direct conflict with RDR in suggesting that restricted and tied advice do not have to agree a fee.

The fact remains that independent advice is really only deployed wholesale in the UK, the majority of EU nations have tied agent advice, so it is logical that they will not look to completely overhaul how advisers are remunerated EU wide. They will wait and see how the UK develops and affects the UK market.

Will RDR die? We suggest not. MiFID stands for Markets in Financial Instruments Directive. It means just that, a directive. It is not law, EU regulators are free to interpret and implement the directive as they see fit to best suit their local market and advice practices.

Despite many commentators saying that commissions must therefore be allowed under MiFID in the UK, we suggest the FSA will interpret MiFID differently and that the current RDR proposals will remain.

Advisers, whether restricted or independent will still have to agree a fee with their client pre-sale, even if it is to be paid for from charges levied on the investment, pension or insurance policy (commission in just another name).