EUROPE – The economics committee of the European Parliament wants to amend the Investment Services Directive to ensure that pension savers are not hit by unnecessary regulation.
MEPs on the Economic and Monetary Affairs Committee, or EMAC, will next Tuesday, July 8, seek to vote through key amendments to the European Commission’s update of the Investment Services Directive. The objective is to ensure that savers who invest in pension funds are not burdened by unnecessary regulation.
The update of the ISD, seen as a cornerstone of the European Union’s Financial Services Action Plan, seeks to promote a “single passport” for investment firms, investor protection and a regulatory framework for investor transactions.
The European Parliament’s rapporteur for the ISD, Theresa Villiers, says the Parliament wants to ensure that brokers providing buying and selling services to pension funds are not entrapped in costly new regulation provisions designed to protect investors using financial advisers.
Villiers is keen to ensure that a clear distinction is made between the application of the legislation to the retail and wholesale business.
The ISD proposal is a key part of the Financial Services Action Plan based on a “single passport” that would allow financial companies registered and supervised in their home state to operate throughout the EU.
The idea is to increase funds for investment, thus boosting economic growth and introduce more competition in the industry by promoting investor choice. This will result in reduced costs for buying and selling shares and other financial products as well as providing enhanced transparency.
In particular, the EMAC is likely to vote for a flexible approach to the “best execution” practice, which obliges a broker to obtain the best price for the client. The intention is to protect investors but at the same time not impose too much of a regulatory a burden on firms.
Other amendments seek to protect investors where investment advice is concerned, without imposing too excessive a burden on the many small firms that offer such advice. The aim is to bring the legislation into line with existing rules affecting the sale of insurance.