BANKS and investment firms have until the second quarter of next year to scrap pay incentives that could encourage the mis-selling of financial products, EU regulators said yesterday.
The draft plan marked a widening remit for the EU’s securities watchdog as it pushes into investor protection territory, traditionally a preserve of national supervisors.
Steven Maijoor, chair of the European Securities and Markets Authority (Esma), said there had been a number of mis-selling scandals hitting retail investors across the region in the past decade and a more consistent approach was needed to investor protection.
“A key factor identified as a driver for the promotion, recommendation and selling of unsuitable products is the presence of financial incentive schemes for sales staff that do not take account of the clients’ best interests,” Maijoor said.
The Esma draft guidelines, out for public consultation until December, flesh out basic requirements in an EU securities law known as MiFID.
City A.M. Reporter