A majority of investment professionals in the European Union oppose an outright ban on inducements and call for better cost-disclosure standards and financial literacy for investors, a CFA Institute survey reveals.
In its latest survey, the global association for investment professionals found that a third of the European Union (EU) investment experts think inducement payments should be banned, citing that this could negatively impact the variety of products offered to clients.
In contrast, more than half of the EU professionals prefer increasing financial literacy and investor education efforts and mandating clear disclosure of all commission payments instead of a ban.
Two-thirds of respondents in the EU consider remuneration structures to be the leading cause of mis-selling.
The EU is considering a bloc-wide ban on inducements as part of its broader retail investment strategy, expected to be published in April this year.
According to the European commissioner for financial stability, financial services and capital markets union Mairead McGuinness, the current system of inducements paid to advisers results in retail investors falling short of what they may achieve. She said the ban could steer retail investors towards exchange-traded funds and potentially better returns.
However, commenting on the CFA research, Josina Kamerling, head of regulatory outreach for CFA Institute in EMEA, said: “…diverging views amongst EU member states is likely to prevent a unified approach on this issue and is reflective of the diversity of market structures which needs to be tackled before any ban.
“In our view, banning inducements is not the immediate solution, but addressing a number of key market structure issues is crucial.”
CFA Institute Global Survey on Inducements sought responses from 1,000 investors globally to examine respondents’ views concerning a possible inducement ban.
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