Regulating Independent Financial Advisers: Current Trends and Reform Proposals, between the EU and the National Level

34 Pages Posted: 28 Feb 2012

See all articles by Riccardo de Caria

Riccardo de Caria

Università degli Studi di Torino - Dipartimento di Giurisprudenza

Date Written: February 22, 2012

Abstract

The purpose of this work is to inquire into the rules governing the activity of independent financial advisers. The reason for concentrating on this topic is that, as their very name makes it clear, they are by definition immune from the conflicts of interests that typically affect other financial institutions providing financial advice. This seems to be a particularly valuable asset to which financial regulators should attach proper consideration, particularly when trying to work out regulatory solutions aimed at preventing the occurrence of other crises, as seems to be the underlying rationale of all the recent efforts to overhaul the framework for financial regulation, both at global and national level.

The structure of the work - whose focus is confined to the EU system and particularly to two countries taken as a case-study, the UK and Italy - is the following: first of all, we will clarify what we mean precisely by independent financial advisers: the name clearly gives an idea of what we are referring to, but it is obviously very important to identify from the outset, precisely what the law means by such notion. In particular, we will consider the issue of remuneration of independent financial advisers, which is crucial for defining their notion.

After that, we will go into more details on why independent financial advisers seem to be particularly promising in working around the conflicts of interests typical of traditional investment firms, and why in terms of policy it would seem wise to encourage the development of such an alternative channel for financial investments, also as a possible alternative to heavier regulation of the traditional channels.

Next, we will consider the key features of independent financial advisers regulation, starting from the EU Directive on markets in financial instruments (MiFID) and then analysing two very different countries, the UK and Italy: we will use them as case-studies because, from a historical point of view, they are at the respective ends of the spectrum, the former having a 20-years experience in the regulation of the subject, while the latter only recently having started to adopt its first laws on it.

We will then move to the assessment of such regulatory architecture, trying to understand if it adequately protects and promotes an effective competition to incumbent financial institutions from independent financial advisers, if the reform trend manifested in the UK in the recent years has gone in the right direction, and if the Italian newly-approved regulation is a fertile environment for the growth of this new profession, all this against the background of the EU framework.

Finally, we will go a step further, trying to understand if the current reform proposals at the EU level are to be welcomed, to imagine what other improvements could be made to the existing regime, and to appraise to what extent there is a need for competition law to complement sector-specific regulation, if we want to encourage the development of a lively industry of independent financial advice.

Keywords: Mifid, independent financial advisers, financial regulation, financial advisers, FSA, consulenti finanziari, consulenza finanziaria indipendente, financial advice, Financial Crisis of 2008/2009, consulenti finanziari indipendenti, consulenza finanziaria, retail distribution review

Suggested Citation

de Caria, Riccardo, Regulating Independent Financial Advisers: Current Trends and Reform Proposals, between the EU and the National Level (February 22, 2012). Available at SSRN: https://ssrn.com/abstract=2012334 or http://dx.doi.org/10.2139/ssrn.2012334

Riccardo De Caria (Contact Author)

Università degli Studi di Torino - Dipartimento di Giurisprudenza ( email )

Lungo Dora Siena 100/A
Torino, TO 10153
Italy

HOME PAGE: http://unito.academia.edu/RiccardodeCaria

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