Investor Protection: Which Way Now? Launch of 'Rethinking Asset Management' in Paris

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Europe needs to look beyond the current legislative proposals to better protect investors. Beyond banning inducements for some advisers, regulation should address the incentives built into the remuneration of all sales personnel. It should also better articulate the power to limit or ban the distribution of certain products. Supervisors are wary about a growing risk of misselling amidst increasing product complexity. But concerns are mounting also about the effects that tougher prudential requirements for banks may have on the design and sale of investment products to retail clients.

With the support of the CFA Institute, ECMI-CEPS presented its report “Rethinking Asset Management” in Paris. Delivering a keynote speech, Edouard Vieillefond (Managing Director, AMF) stressed that MiFID II and PRIPs are steps in the right direction but represent a partial response to investor protection. The subsequent discussion favoured hard disclosure, whereby investors would be informed periodically of distribution costs, as well as giving more weight to non-market risks in the Key Information Document (KID).