FSA says RDR commission ban compatible with MiFID II

The Financial Services Authority (FSA) has confirmed it will press ahead with the ban on commission, despite suggestions European Commission proposals could hamper, or even put an end to, its plans.

A draft of the Markets in Financial Instruments Directive II (MiFID II), published in October, limited the ban on receiving commission payments from product providers specifically to independent financial advisers.

This led to suggestions the FSA would be forced to look again at its Retail Distribution Review (RDR) position and allow tied and multi-tied - 'restricted' from next year - advisers to take commission.

However, speaking at a British Bankers' Association event in London yesterday, David Lawton, acting director for markets at the FSA, said the RDR rules were "compatible" with the European proposals.

"While the MiFID II proposals explicitly provide for a ban on commission when firms describe their advice as ‘independent', the draft directive does not prohibit regulators from going further," he explained.

"In the UK we will already have banned commissions set by product providers - for advisers of all types - when MiFID II comes into force."

Lawton also insisted the UK's stance on the issue could also lead other European nations to implement a wider ban on commission.

"It may yet prove that other member states are also interested in restricting inducements for all firms that give advice, while remaining in line with MiFID II," he added.