Labour MEPs have failed to stand up for investors by supporting a ban on financial advisers giving preference to products on which they receive a payment, said senior Conservative MEP Julie Girling.
The Parliament’s Economics Committee voted last week on new legislation which brings Europe-wide financial legislation up-to-date with modern technology so that markets are more transparent and less risky for investors.
One proposal put forward was to ban outright so-called ‘inducements’ – when an investment firm receives a commission for selling one product which may not necessarily be in the best interests of the investor. In this week’s vote, Labour MEP and Economics spokesman, Arlene McCarthy, voted against an outright ban despite recommendations of a review carried out by the last Labour Government in the UK.
The UK’s FSA has taken action to ensure that advisers’ recommendations are not distorted by outside influence as part of the 2006 Retail Distribution Review (RDR). However, unless banned at EU level, advisers will still be able to operate with inducements within the UK.
Julie said: “Many constituents across the South West will have investments and it is imperative that they are able to access completely independent and impartial advice from Financial Advisors rather than be sold a financial product which is entirely useless to them while the company selling it makes a quick buck.
“Labour MEPs have failed to stand up for ordinary investors who rely on advisers to maximise returns on their life savings or investments for later in life. It is particularly ironic that Labour has tried to water down similar provisions to the RDR review that its own government set up, seeking to improve investor confidence.
“There are many horror stories of individuals being mis-sold financial products. The interests of millions of investors has been discarded by Labour, they have simply not thought through the outcome of their actions. This is really depressing news for the future of millions of investors across the UK.”