Christian Lindner and Magnus Brunner, the German and Austrian Finance Ministers, have told Mairead McGuinness, the European Commissioner for Financial Services, that they oppose a ban on commissions for brokers (see EUROPE 13106/21). In two separate letters, dated respectively Saturday 28 December and Tuesday 31 January and which EUROPE was able to obtain, the two Ministers aligned themselves with the position of the insurance and finance professionals (see EUROPE 13099/12).
According to Mr Lindner, “the current MiFID [Markets in Financial Instruments Directive] framework on inducements is already well balanced and forces investment firms to act in the best interest of their clients”. It ensures that “fair investment advice is available also for investors that would not be in a position to pay large fees in comparison the amounts invested”.
“I am strongly concerned that a general ban would inhibit the provision of investment advice in cases where it is mostly needed”, he added.
Similarly, Mr Brunner believes that “the current framework [...] is already well balanced as it foresees several safeguards including the requirement for Investment firms to make commissions transparent and to act in the best interest of their clients”.
He considered that a mandatory move to fee-based models would be detrimental to the overall objective of increasing retail investor participation in capital markets, and many retail investors would lose access to investment advice.
“Furthermore, both the commission-based and fee-based model present a similar level of costs for retail Investors”, he stressed, referring to the study ‘Disclosure, inducements and suitability rules for retail investors’, published by the Commission.
To read Christian Lidner’s letter: https://aeur.eu/f/5a4 and Magnus Brunner’s letter: https://aeur.eu/f/5a5 (Original version in French by Anne Damiani)