For information I am copying an email sent by my local MEP
Dear Mr Scott,
I am sorry to be replying to you with such delay, but it is only after certain parliamentary developments that I can usefully reply to you.
The European Parliament and Council have now both completed their first readings of the Financial Services Directive, to which your query related. The result is that Parliament's position differs from that of the Council in some important ways.
The report passed by the Parliament seeks to ensure that investors are able to continue to access low-cost investment services whilst ensuring investors remain adequately protected. The Parliament's amendments safeguard low-cost services such as on-line share trading and does not upset the UK Government's plans to offer a suite of simplified investment products as recommended in the Sandler Report. The amendments represent the need to balance investor choice and investor protection. Investors who do not want to receive investment advice will not be required to undergo an extensive fact-finding exercise which enables a bank or stockbroker to determine whether a particular service is suitable for them. By safeguarding such low-cost services, the Parliament's amendments contribute to narrowing the savings gap across the EU and encourage investors to save through a variety of means.
The report contains many compromises from a UK perspective but on the whole can be seen as a positive result. The Directive, if amended as Parliament suggests, will ensure that UK and EU financial markets remain clean, fair and orderly, but most of all, it ensures that investors benefit both from low-cost investment services and a high level of protection.
Whilst the Council text improved significantly during the negotiations, the Council's report did not reiterate the opinion of the Parliament in several key areas:
Article 18, which covers the treatment of execution-only business i.e. the sale of investment services or products without advice (and therefore without the need to verify whether the product or service is ‘suitable’ for the client).
Scope, which distinguishes between retail sector and wholesale sector.
Article 25, which covers ‘mandatory quote disclosure’ (which is sometimes referred to as pre trade transparency).
It will be critical for the Council and the European Parliament to work together closely during the European Parliament’s second reading for the Directive in order to find a suitable compromise for the critical areas, especially given the time constraints imposed by the European elections. Even though the Council text does differ from the Parliament, we remain very hopeful that we can work together to ensure a final Directive close to the views of the Parliament and indeed the outcome of the Plenary vote.
I hope that the information given has helped to answer your queries on this matter. I wish you well for the future.
If you do require any further information, however, I recommend that you contact my colleague Peter Skinner, who is the European Parliamentary Labour Party's full member on the Economic and Monetary Affairs Committee dealing with this issue ([email protected]; tel 00-32-2-284 5458). (I have only been a substitute member of EMAC, and have recently changed to the Legal Affairs Comittee.)
Dr Barbara O'Toole, Labour MEP for the North East of England
ASP 13 G 261, Rue Wiertz
Tel +32-2-28 47362
Fax +32-2-28 49362 [email protected]