Commission-based
investment advice
The debate on a ban on commissions has flared up again in Brussels. On 24 May 2023, EU Financial Markets Commissioner Mairead McGuinness unveiled proposals for a directive to implement the EU retail investment strategy. A ban on commission-based advice is not included for the time being.
Discussions about a ban on commission for investment advisory services have flared up time and time again. At the end of 2022, EU Financial Markets Commissioner Mairead McGuinness again put commission-based investment advice under scrutiny. She complained that commission-based advice often leads to retail investors being sold expensive or unsuitable products. And the disclosure of costs for financial products regulated in MiFID II has not led to a shift from commission-based to fee-based advice.
On 24 May 2023, Mairead McGuinness unveiled proposals for a directive to implement the EU retail investment strategy. A ban on commission-based advice is not included for the time being. However, commissions in sales without advice are to be prohibited. Furthermore, the proposals contain additional requirements for advice and new transparency obligations, especially regarding costs.
'Mairead McGuinness' proposal contains both good and bad. On the good side, retail investors will keep access to a wide range of advice. In this way, they can easily carry on benefiting from the opportunities of the capital markets and build up their private old-age provision. However, we oppose the commission ban in respect of non-advised sales, as well as the additional requirements regarding commission-based advice. These measures will not further increase the current level of investor protection, which since MiFID II is already very high', says Thomas Richter, CEO of BVI.
