Last week the European Federation of Financial Advisers issued a learned paper on MiFID II, which seeks to introduce a watered down version of RDR to the European Market.
Last December, I was privileged to address the FECIF conference in Brussels on the effect that RDR has had on adviser availability in the UK.
European IFAs are not in a single market but in a three-cornered fight between themselves, their national governments, and big firms – generally banks. European consumer associations usually support IFAs. They realise that the big players, whether banks or governments, rarely give consumers a good deal but, as in the UK, the big players have considerable political clout.
This perpetual battle is essentially one between freedom and servitude.
If you believe that social benefit is primarily delivered by individuals providing for their futures so that they are no longer dependent on government in times of stress, you will realise that a strong IFA sector is essential to avoid the consumer being captured by the vested interests of big business or big government.
If the vested interests can marginalise the IFAs then they can take control of the masses and their wealth. The classic conflict between the individual and the collective. The wisdom of citizenry versus the wisdom of a self-selecting few.
One of the most heavily discussed issues in Brussels is something barely discussed in the UK – the Cypriot Financial Crisis of 2012. However, there is a principle which should concern us. To sort out their crisis the Cypriots were encouraged by the EU to create a levy which captured all funds over €100,000 (£73,800) held in the Cypriot banks. This was little more than legalised theft.
Since 2012, all the major governments in the world have passed legislation which allows them to do the same thing. Along with this, some governments are passing legislation to force advisers to disclose their client’s holdings.
So here is a moral dilemma for you. Imagine it is 2017, and the eurozone has collapsed. As part of their worldwide solution, all lump sums over and above the FSCS limit of £100,000 will be appropriated by the government. You receive an email from the FCA demanding you send them a list of all your clients’ holdings.
If you comply you can say goodbye to your business. If you do not, you go to jail.
Do you send it?
Garry Heath is editor of the Heath Report.
