In a letter to Sharon Bowles, who chairs the Committee and additionally serves as the MEP for southeast England, the trade body advised against including similar investor protection and commission prohibition provisions to those set out in Mifid II, in other EU legislation – specifically Packaged Retail Investment Products (PRIPs) and Insurance Mediation Directive II.
According to AILO, including such measures would result in a narrower choice of products for consumers and policyholders, and less opportunity to obtain investment advice.
Another concern, the Association said, is the impact a “cut and paste” of the Mifid proposals into the Insurance Mediation Directive would have on the European single market. Insurers would no longer have access to independent channels, and would be prevented from competing in local markets, owing to the prohibitive costs of developing a tied sales force in each member state.
Commission prohibition could therefore result in “a significant barrier to market entry”, it argued, in turn reducing competition and the choice of products available to consumers.
AILO chairman Claudia Lang said: “We believe that a prohibition on commission for insurance PRIPs would jeopardise consumers’ access to independent advice. Surveys show that consumers are generally not able or willing to pay for financial advice up front.
“There is a significant risk that only the affluent would continue to benefit from professional guidance and that there would be a substantial reduction in the numbers of independent advisers across the EU. We have already seen the effect of the commission ban introduced in Finland in 2005, which radically reduced the independent advice market.”
In its letter to Bowles, AILO said conflicts of interest arising from commission payments could be managed through a disclosure regime. The Association, which will celebrate its 25th anniversary later this year, represents the interests of more than 50 life companies.
