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Financial adviser body calls for harmonisation of EU product distribution rules

The legislative barriers restricting the cross-border distribution of funds across Europe have to be removed and replaced with harmonised rules at EU level, the European Federation of Financial Intermediaries and Financial Advisers (Fecif) says.


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The trade body representing over 245,000 advisers and intermediaries in Europe is actively supporting the creation of a Capital Markets Union (CMU) by the European Commission, to facilitate the marketing of funds outside of their domicile member states.
The organisation said in a statement that it supports the creation of a “truly unified capital markets industry, where barriers that prevent and/or have a material impact on the cross-border distribution of funds, or financial services in general, are reduced or abolished”.

National barriers

Fecif maintains that cross-border competition and efficiency must be introduced and the only way to achieve that is by deregulating national barriers and introducing harmonised rules across all member states.
“We strongly believe and assert that the underlying purpose of the CMU initiative must specifically be to abolish national barriers, which have proven to prohibit and limit the cross-border distribution of funds for instance,” Fecif board member Kevin Mudd said.
Especially after Brexit, these developments are highly desirable and need to be actively sought.
“We believe that following Brexit, the need and necessity to modernise and clarify this overly regulated and, in some instances, unnecessarily complicated sector is greater than ever,” Mudd explained.
Fecif made its views known in its recent submission to the EU’s Inception Impact Assessment Initiative in relation to ‘Reducing barriers to cross-border distribution of investment funds’.

Certainty needed

The primary source of uncertainty and confusion is that the interpretations across the EU vary widely, as the example of the implementation of  Mifid II as well as the Alternative Investment Fund Marketing Directive (AIFMD) by different EU member states shows.
“The member states which have implemented it into national law and national rules have ended up with significantly different rules and regulations between them,” Mudd noted.
“This was the obvious result of the flexibility and elasticity of rules and definitions which were allowed within the wording of the AIFMD [and Mifid II].”
This is why legal certainty is “a pivotal element for the efficient and continuous distribution of funds across a CMU”, Fecif secretary general Paul Stanfield added.
“What should have been a simple and cost efficient process – the cross-border distribution of AIFs – has unfortunately proved to be a very expensive and burdensome process.”