Dutch market mulls the implications of RDR-like commission bans

New regulations changing the the way remuneration flows between fund manufacturers and distributors in the Netherlands are moving closer, raising concerns about profitability in the asset management industry, according to comments being heard at the InvestmentEurope Fund Selector Forum in Amsterdam today.

Discussions around regulated commission bans been pursued by the Dutch asset management industry through bodies such as EFAMA at the European level.

However, the proposals also affect the distribution potential of funds brought into the country, according to groups such as Man Investments and UBS Global Asset Management.

Law firm Clifford Chance warned as early as February 2012 of the potential problems facing the Dutch industry in the wake of intended changes to MiFID, the Markets in Financial Instruments Directive.

Clifford Chance noted the 1 January 2013 deadline for implementing a separation of advice and product fees, as well as a ban on all third party inducement fees. (Click here to read the full note: RDR in the Netherlands )

Those responsible for developing business in the Netherlands on behalf of internationally active groups say that there is now considerable focus locally on how the UK Retail Distribution Review is progressing – for example, to gauge the practical outcome on manufacturers and distributors, and how this might translate to the Dutch market scenario – as well as interest in the potential regulatory gap served up by the recent decision of the European Parliament’s Economic and Monetary Affairs Committee to slightly amend the European legislation that serves as the basis for the proposed bans. (Click here for further information on the ECON decision, previously reported in InvestmentEurope)

However, so far there do not appear to be any holes appearing in the hard line Dutch regulatory approach to commission.

The fear remains, however, that by influencing the balance of power between manufacturers and distributors, the new rules could lead to a reduced ability on the part of manufacturers to negotiate prices, effectively squeezing the margins on their business further at a time when low interest rates have already made it difficult to generate the levels of return that investors want.


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