The deputy chair of the European Federation of Financial Advisers and Financial Intermediaries (Fecif), Jiří Šindelář, said the combined regulatory burden was not only having a “devastating effect on the [small and medium-sized] businesses themselves, but will also have a detrimental cost for the customer”.
Šindelář, who represents Fecif’s 245,000 members, argues the “savage regulatory movement” was creating huge cost pressure, which has been “intentionally underestimated by the regulators”.
“Less visible, [are the] intangible payments related to market distortion caused by over-regulation,” he said.
“Maybe the most important example: as the industry barriers and fixed costs begin to raise, because of new exams, codes of conduct etc., small and medium enterprises will be slowly pushed out of the market.”
He argued the “apocalypse” in Europe’s largest advice market, Germany, could be directly traced to these unintended consequences triggered by Mifid II (markets in financial instruments directive) implementation.
Šindelář warned: “Both implicit and explicit costs are often not reflected by the regulators in their cost-benefit assessments. This is done intentionally, as correct evaluation would totally prevent many colossal regulatory changes from happening.
“Nevertheless, the customer in the centre of things, should always account for the price of the protection they are forced to enjoy.”
Technology
Šindelář has little time for technology as a cost saver to mitigate the regulatory burden.
Using a comparison with Uber, he argues that clients could be forced to use lightly regulated and inferior robo-advice solutions.
In a call to arms, he urged advisers to educate clients to see the value of advice and for clients to lobby MEPs to row back on heavy handed, and ultimately more expensive, regulation.
Andrew Philips says:
Not everyone in the EU [is] a signed-up member of the bureaucratic ****-storm club then
Christopher Lean says:
Technology is an excellent way to mitigate the regulatory costs and deal with compliance. Those that do not embrace technology will be left behind.
This leaves more time for the adviser to provide financial planning advice to his/her clients, not less.