euro adviser makes case for restricted commission

European trade body member Graham Reid has called for rate of commission to be restricted rather than banned outright in a letter to Michel Barnier, European commissioner for internal markets and service.

euro adviser makes case for restricted commission

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Reid, who is founding director of Belgium-based Classic Financial Solutions and a member of the European Federation of Financial Advisers and Financial Intermediaries (Fecif), says this approach will ensure that “only the serious companies stay in business”.

He also wants to allow, or even oblige all financial services companies to accept applications from anywhere in Europe if they meet the needs of the investor, claiming that it is “unacceptable for the legislation to oblige investors to settle for inferior products”.

The letter contained some detailed examples of situations he personally encountered in the last few years when advising expatriates which highlight the “weaknesses in the existing regulatory and supervisory framework”.

Example one: a British expatriate client living in Belgium

Aged 38, this client decided to take out an endowment insurance policy before age 40 in anticipation of returning to the UK in four years’ time. The cost of insurance rises significantly over this age, and he wanted to obtain a policy at a good price to use as security for the mortgage on a house that he intended to buy after returning to the UK.

A life policy in pounds sterling and issued by a British company should have been the perfect answer, Reid stated. 

But no British company is willing under the freedom of services legislation to offer such a policy to a client living in Belgium, and a Belgian policy would not easily be acceptable to a UK bank as security.

Reid argued that expatriates “should be allowed to take into account where they expect to be when the policy will be needed and not limited to what can be sold where they are living temporarily”.

Example two: A Dutch client living in Germany

This client was able to speak fluent English but little German and he could not find a company willing to offer him an investment policy in English or Dutch because the rules are that they have to be written in accordance with German regulations and in German. The German product was an inferior product with higher management charges.

Example three: A non-French National moving to France to retire 

This client found that his savings policies were more heavily taxed than comparable policies French policies, even if he had held them for many years and well before even deciding to live in France.

Example four: A self–employed British citizen coming to Belgium

This client cannot legally continue to contribute to a UK pension scheme from the time he ceases to be UK resident. Even if he could continue contributions, it would be valueless because he does not get tax relief in Belgium unless he forms a company there or takes out a Belgian pension savings policy (which is not practicable if he only plans to stay for a few years).

 

Reid has lived in Belgium since 1969 and he is a Chartered Accountant and member of both the Taxation faculty and the Financial Services Faculty of the Institute of Chartered Accountants in England and Wales.

His career in international tax planning has included a period working on the creation of what is now Nedgroup Trust  in Guernsey for a subsidiary of Old Mutual.

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