Financial advisers operating in Europe are less strictly regulated than their UK counterparts yet consumers are still afforded the same degree of protection, according to Zurich Life government affairs principal Matt Connell.
Addressing key points in the Markets in Financial Instruments Directive (MiFID II), published last week, Connell said requirements concerning remuneration and suitability were less onerous at EU level than under the Financial Conduct Authority (FCA).
For instance, under MiFID, 'independent' advisers in Europe are not required to be strictly whole-of-market, while tied practitioners can continue to collect commission, Connell said.
However, the regulation still aims to achieve maximum consumer protection.
Connell said: "On issues like training, suitability and remuneration, the UK rules are stricter and have developed faster than in the rest of Europe.
"But in terms of the individuals and how protected they are, other European countries would argue they look after their citizens but in a slightly different way."
He added: "The UK would say 'we've got a more sophisticated regulatory system', but the rest of the EU would say 'we haven't seen similar problems with mis-selling the UK has had'."
The UK has been more radical in terms of private pension provision in particular, Connell explained, whereas in the EU there's been "less of a radical change and less regulation as a result."
Differences
Connell suggested IFAs were always going to face tougher requirements than restricted advisers in both European and UK regulations, but in the UK it was feared that the large IFA sector would suffer if it was the only one targeted by the new measures, hence it was applied more broadly.
However, as a whole, Connell said, the difference between MiFID and the Retail Distribution Review (RDR) was more of a case of a different emphasis: "On conduct of business the UK is stricter. Other European countries are stricter in the sense that they ban execution-only and only allow adviser sales."
The new version of MiFID allows regional regulators to go beyond the EU rules, making it possible for the FCA to continue with the RDR and its plans for the execution-only space.
Connell said he was surprised an anticipated ban on non-advised sales without appropriateness testing was not included in the directive.
The measure will most likely now appear in the insurance mediation directive, which is currently being reviewed in order to upgrade consumer protection in the insurance sector.
The European Commission said in 2012 it wanted to "create common standards across insurance sales and ensure proper advice is given on products".
Read more about MiFID HERE.
