EU Commissioner for Financial Services Mairead McGuinness spoke to MEPs on the Committee on Economic and Monetary Affairs. She gave more details on the strategy for retail investors, including how to address the ban on commissions.
The insurance and finance industry has expressed its disapproval of this ban (see EUROPE 13099/12). In their view, this ban would effectively limit the use of brokers paid by these commissions and drive consumers to other less reliable sources of information.
McGuinness provided assurances that this feedback was included in the impact assessment. “Inducements can lead to conflicts of interest which can have a negative effect on the quality of investment advice”, she argued.
However, the study showed that retail investors are often advised to buy more expensive products and/or products that are not always the most suitable for their needs. In addition, low-cost products, like Exchange Traded Funds, are hardly ever recommended.
“Products for which inducements are paid are on average 35% more expensive for retail investors than investment products where no inducements are paid”, she said.
In the Netherlands, where the ban already exists, there has been no reduction in retail investment, but in fact a slight increase.
The Commission is therefore considering measures to facilitate access to cost-effective investment services and to increase the engagement of retail investors.
“We need to remove the obstacles that stop people from investing in capital markets and also prevent them from making the most of their money”, she said.
Eero Heinäluoma (S&D, Finnish) pledged his group’s support for a ban on commissions and said he was in favour of a fee-based advice model.
Markus Ferber (EPP, German) and Michiel Hoogeveen (ECR, Dutch), on the other hand, argued that the Dutch model was not applicable to all European countries. Although she agreed with this remark, the Commissioner pointed out the interests of small investors.
Ondřej Kovařík (Renew Europe, Czech) asked whether this strategy was linked to the law on the listing of companies, in order to ensure better access to finance for EU companies.
This new act on stock exchange listing aims to make it easier for our companies, especially the smaller ones, to raise capital on the stock exchange by reducing compliance and listing costs. “They are two sides of the one coin”, the Commissioner replied.
The Commission’s strategy will be presented in April. (Original version in French by Anne Damiani)