Last May, in its initiative to revise the retail investor protection rules amending the MiFID and IDD directives, the European Commission proposed a partial ban on ‘inducements’, the commissions received by advisers, brokers and other intermediaries of an investment fund for the sale of a product (see EUROPE 13187/21).
In Parliament, opinions differ from one political group to another (see EUROPE 13353/10), as they do in the Council of the EU, where some Member States support a total ban on this practice while others are categorically opposed.
However, according to a report by the previous Spanish Presidency of the EU Council, most Member States have expressed an interest in continuing to explore ways of better regulating these inducements. For example, the Belgian Presidency recently proposed a partial ban on inducements, limiting them to the sale of complex products without advice.
In a discussion document of which Agence Europe has received a copy, the Belgian authorities submitted this proposal to the Member States on the basis of three principles.
Firstly, the Belgian Presidency proposed this alternative using a risk-based approach, limiting the partial ban on commissions on sales without advice to complex products only, on the grounds that the latter generally involve higher risks for customers.
Secondly, it introduced a new ‘inducements test’ which would be applied when commissions are paid or received. The new incentive test would replace the current MiFID ‘quality enhancement test’ and the IDD ‘no detriment test’.
Thirdly, the Presidency has proposed putting portfolio managers and independent advisers on an equal footing. This means that the prohibition on commissions paid or accepted and retained would also apply to independent advisers and similarly to insurance undertakings and insurance intermediaries where they provide advice on an independent basis.
Finally, while the European Commission was banking on a revision clause 3 years after the entry into force of the revision of the directives, the Belgian Presidency proposed a clause that would be extended to 5 years, emphasising that the majority of delegations were in favour of this.
At the Council of the EU, all of these proposals are due to be examined on Monday 18 and Tuesday 19 March by the working group on financial services and banking union, while at Parliament, Ms Yon-Courtin’s draft report will be put to the vote on Wednesday 20 March in the Committee on Economic and Monetary Affairs.
Link to the Belgian Presidency’s discussion paper: https://aeur.eu/f/bba (Original version in French by Bernard Denuit)