The letter, seen exclusively by IA, is in response to correspondence from Derudder, who represents around 200,000 intermediaries in Europe in his role as chairman of the European Federation of Financial Advisers and Financial Intermediaries (Fecif), and forms part of ongoing communication between the two over the past 18 months.
Derudder has been vocal in his objection to a ban on commission payments, which was proposed by the European Commission as part of the so-called MiFID 2 – a review of the Markets in Financial Instruments Directive, sweeping regulation originally implemented in November 2007.
In his letter, Barnier rejects an assertion by Derudder that the EC is introducing a “tsunami” of regulation that will be “excessively burdensome for the financial services industry with no benefits to consumers”. He argues instead that the “global economic crisis has shown a number of weaknesses in the existing regulatory framework”.
Barnier makes his case for a ban on commission, a proposal which was in fact rejected by the European Parliament in mid-September.
In his letter, he said that “when advice is provided on an independent basis, the adviser should not receive inducements from third parties. An adviser receiving payments from third parties should not be able to present his or her services to clients as independent.”
And, in case there was any doubt, he added: “An adviser receiving payments from third parties should not be able to present his or her services to clients as independent.”
Paul Stanfield, chief executive of the Federation of European Independent Financial Advisers said he would favour greater disclosure, over a straight ban.
“Our general position at this stage would be for disclosure rather than a ban – like many industry commentators we feel the latter could have very negative effects on the availability of good quality advice, at a time when Europe needs to engage its populace more than ever with regards to such advice in order to increase the amount of saving and financial planning that is undertaken,” said Stanfield.
“Otherwise social services across the EU will struggle even further to meet the present and future needs of the public.”
