A working group under the leadership of the Danish FSA (Finanstilsynet) is considering whether or not to ban commission for advice on financial products such as funds as part of the local implementation of aspects of Mifid II.
The working group includes representatives of the Danish Investment Fund Association (IFB), the Danish Bankers Association (Finansrådet), the Danish Consumer Council (Forbrugerrådet Tænk), and the Danish Shareholders Association (Dansk Aktionærforening).
Mifid II is intended to come into force by January 2017 for EU member states, and it will affect the existing Danish model for commission paid to intermediaries providing financial advice. Currently, most distribution of retail funds in Denmark goes through banks, to access an estimated 760,000 retail investors who rely on advice sourced this way.
“The idea of Mifid II is to give investors even better insight into what it costs to invest. This is good for investors. So, this is an ambition that we support at the Investment Fund Association,” said chief executive Jens Jørgen Holm Møller.
A key question being considered is what model should therefore apply going forward. The working group has been asked to consider whether, for example, Denmark should follow the model applied in the Netherlands, which has banned commission, or whether distribution against commission should be considered as one of a number of solutions.
IFB’s view is that the solution should be selected that best meets the needs of investors, Holm Møller said.
“We know that eight of 10 Danish investors want advice, and they can obtain that today. We also know that the ban in the Netherlands has led to many fewer retail investors getting access to advice. Instead they are offered internet based solutions, through which they can do self selection. The Dutch model is fairly new and unproven, and it has led to a number of unforeseen changes. At IFB we are not going in for one or other distribution model. But we want to work to ensure that Danish investors with smaller sums also have access to advice in future.”