F.R. Better Finance (BF), the European organisation representing, through national associations, four million EU retail investors, has once again drawn attention to the “problem of conflicts of interest in the distribution of retail investment products” – including sales commissions paid by providers to distributors – at the meeting of the Governmental Expert Group on Retail Financial Services convened by the European Commission (EC). BF also pointed out the shortcomings of the Retail Investor Strategy (RIS) being developed by the EC, insofar as “key priorities such as a more coherent cross-cutting legal framework for all retail investment products and clear, relevant and comparable information on key aspects of the products” have been left out of the RIS, issues that “have simply been forgotten”.
Regarding the conflicts of interest generated by sales incentives for distributors, Guillaume Prache, Managing Director of BF, said that “when a retail distributor is compensated, calling him an investment advisor is like calling a car salesman a transport advisor”.
