The European Parliament has dropped plans to introduce a cap of 200 on adviser’s hourly charges, following new European packaged retail investment products regulations.
The European Parliament has voted on amendments to Packaged Retail Investment Product (Prips) legislation which will instruct disclosure rules for EU members on all retail investment products, structured retail products, and certain life insurance products.
The proposed amendment could have resulted in total costs being limited to 200, rather than an hourly limit. The proposed law will be passed to the European Council to be approved next year.
The amendment said: "When an hourly rate is charged, the total amount charged should not exceed 200."
The 200 cap was contained within a draft of the Key Information Documents for Investment Products (KIDIP) regulations published in November.
Association of Professional Financial Advisers (APFA) was in contact with members of the European parliament to drop the cap and worked in partnership with BIPAR, the European federation for intermediaries.
Additionally, the European Parliament has backed proposals for a key information document to be adopted across all financial products.
The document, which was introduced to regulated investment funds under Ucits IV rules in 2011, will apply to structured products and other retail investment products.
Chris Hannant, director general at APFA, said: "We have been campaigning hard on this and badgering MEPs across the spectrum. I don’t think price caps work full stop. It is not clear whether the cap would have been imposed on all financial advice or limited to Prips products, but it could have had a cataclysmic effect on advisers."
"Capping the amount advisers can charge amounts to a form of price control. History has shown it doesn’t work. Regulators must seek to promote competition within financial advice, not fetter it "The best protection for consumers comes through choice and transparency. A price cap would undermine that, as well as being hugely damaging to advisers.
"The council has to approve its own version of the text and the two will then be reconciled, but I cannot see any member state putting forward anything as stupid as this. When the two versions are reconciled nothing new can be added so this should be the end of this proposal," he added.