To MEPs in ECON: Two reasons to adopt a ban on commission in MiFID II

European Parliament’s Economic Affairs committee (ECON) needs to demonstrate sincere considerations to consumer interest in their efforts on the review of MiFID – the key EU law regulating investment services.

Earlier this fall ECON failed address the critical issue of incentives and commissions paid to financial intermediaries that would sort out conflicts of interest between sellers of investment products and investors. Instead of securing alignment of interest, ECON supported an inadequate system of disclosure of sales inducements which would do nothing to prevent intermediaries pushing their most self-serving product.

The EU Commission demonstrated as early as in November 2010 the uselessness of such disclosures in the study of Consumer Decision-Making in Retail Investment Services. This should be known for the committee.

If the Committee still insist on supporting a system of disclosure, it shouldn’t be due to the financial industry’s massive campaign where they claim layoff of thousands in the intermediations industry if a ban on commissions where to be adopted.

The general rule for financial intermediations is already a ban on commissions in e.g. Norway and yet the financial industry is doing very well.

ECON should be concerned about the distrust and scepticism consumers all over Europe holds towards the investment industry. Such attitudes have been demonstrated repeatedly in the EU Commissions consumer conditions scoreboard. If consumers turn their back to the investment market, ordinary industry would suffer from deficiency of venture capital leading to less innovation, less development and more unemployment.

ECON has a splendid chance to enhance consumer confidence to the financial system by introducing ban on commissions and at the same time assuring European corporations access to capital.

I therefore strongly urge MEP in ECON to vote in favour of a ban on commission.

Stikkord: Antolin Sanchez Presedo, Arlene McCarthy, ECON, Economic and Monetary Affairs Committee, Edward Scicluna, European Parliament, Gunnar Hökmark, Liem Hoang Ngoc, Markus Ferber, MiFID, MiFID Review, Peter Simon, Peter Skinner, S&D, Sirpa Pietikäinen, Sven Giegold, Udo Bullmann