Sifa rejects commission proposals beyond Mifid II

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The Swedish Investment Fund Association has warned against introducing national regulations that go above and beyond those agreed at the EU level on the issue of commission payments.

The warning comes in response to a consultation ongoing in Sweden on how to implement provisions of Mifid II. The Association said that there are not enough reasons to consider broadening the restrictions on remuneration from third parties, and argues that the proposals as they current stand would have “serious negative consequences for customers”.

Only if the rules in Mifid II prove to be insufficient should consideration be given to introducing special rules for Sweden, the Association said.

“The proposed national ban on remuneration in connection with investment advice, in combination with a broad and unspecified authorising [oversight] risks harming the broad range of savings products that today are available to savers,” it said.

“Those players who own the important distribution channels will no longer be able to receive remuneration for offering advice on others’ products. Customers with less capital will therefore be without advice in respect of a broad range. This will happen without having tackled the conflicts of interest that the proposals aim to address. Instead the incentive to offer customers advice to invest in own products rather than external ones will be strengthened, even if an external product may have been more suitable for the customer. Furthermore, there is a risk that the distribution of funds managed by independent fund companies is reduced, which has a strong negative impact on competition. Good competition on the market betweeen different providers and players both in terms of quality and price is to the benefit of consumers. The development that has been on the fund market with a broad range of funds managed by different fund companies is now threatened with being broken. This is not in the best interests of fund investors.”

Importantly, the Association has noted that the Swedish market is different from both the UK and Dutch ones on the question of how to deal with commission.

Sweden has both a much higher participation rate – meaning that a much higher proportion of the population is invested in funds and therefore requires advice – as well as a much more prominent role by domestic players offering their own funds, which creates much greater incentives to sell their own products.

Remuneration from third parties should be possible as long as it is tranferred to the customer as this would imply that such payments would not be against the customer’s best interests, the Association further argues.

The Association said it agrees with the objectives of introducing rules around advice to the law governing securities funds and the law on managers of alternative investment funds. However, it suggests that a single definition of investment advice as used in Mifid II should be used rather than one from law governing financial advice to consumers. Additionally, concepts such as ‘non professional customers’, as used in Mifid II, should be used instead of ‘consumers’.

And the new regulations should also make clear that marketing and information that fund companies offer their customers, even during direct contact, by definition cannot be classified as ‘advice’. The ability of fund companies to market thier products to fund investors follows from the Ucits directive and can not be limited by an extensive interpretation of the financial advice concept, the Association concludes.

To read the full response to the consultation, click here:



Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

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