Commission-based advice: no ban for now
In her speech on 27 April 2023 at the Eurofi conference in Stockholm, EU Financial Markets Commissioner Mairead McGuinness explicitly clarified for the first time that the announced proposal for an "EU strategy for retail investors" will not include a ban on commission-based investment advice. This puts an end to months of speculation about the Commission's position on the matter. According to McGuinness, the Commission has been persuaded that a comprehensive ban on commission would be "too disruptive" at this stage. We had always stressed that a ban on commission-based investment advice would obviously lead to a significant advice gap and would thus run counter to the objective of the retail investment strategy to bring the people closer to the capital markets.
The speech makes clear that the Commission is instead planning a number of other measures to protect the interests of retail investors better:
- new transparency obligations, especially on costs
- additional requirements for commissions
- increasing the “value for money”
- promoting low-cost and comprehensible investment advice
- more comprehensive supervision
In the area of "execution only" transactions, on the other hand, commissions are to be prohibited in the future. In addition, there would be a comprehensive review clause that would put commission-based investment advice back under review if the measures prove to be insufficiently effective in practice.
A comprehensive assessment will only be possible based on the full proposal, which we expect on 24 May 2023. In any case, it is good to see that our intensive efforts on behalf of commission-based investment advice have been successful and that a ban is off the table for the time being.