The European Commission has today published proposals for the implementation of MIFID which threaten to undermine the current level of UK consumer protection in financial services. The Consumer Panel has already raised its concerns with the Commission, as the attached letter, which is being made public today, sets out. Although the Commission appears to have listened to representations, the issues raised are still of concern to the Panel following today's publication.

The following are examples of UK consumer protection measures, set by the Financial Services Authority, which we understand will be under threat.

• The initial disclosure document and the menu, which are aimed at providing consumers with information on the services offered, and the fees charged, by firms in a manner that can easily be compared with the offerings of other firms. These measures also take account of the need for consumers to compare products such as UCITS, which fall within the scope of MiFID, with products that fall outside of its scope (for example certain life insurance products).
• Requirements to disclose commission in cash terms and enhanced suitability standards, which reduce the risk of product bias where advisers are remunerated on a commission only basis.
• Requirements to disclose commission equivalent, which ensure a level playing field between the distribution channels of bancassurers, who can hide their remuneration in the fees charged by the product provider (a subject that MiFID does not address) and independent advisors who cannot.

John Howard, Chairman of the Financial Services Consumer Panel said:

"We must make sure that, in the laudable aim of making it easier for consumers to access financial services in a single market across Europe, we do not lose all of the consumer protection that has been built up in the UK, and that consumers have come to rely on."

The Consumer Panel will be considering the proposals in more detail and will give a lengthier response in due course.

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MEDIA ENQUIRIES

NOTES TO EDITORS:

1. The letter from Chairman of the Panel John Howard to Commissioner McCreevy follows on after these notes to editors.
2. The FSA established the independent Financial Services Consumer Panel in December 1998 to advise its Board on the interests and concerns of consumers and to report on the FSA’s performance in meeting its objectives. The Consumer Panel has statutory status.
3. The emphasis of the Panel’s work is on activities that are regulated by the FSA, although it may also look at the impact on consumers of activities outside but related to the FSA’s remit. More information about the Panel's work is available on our website – www.fs-cp.org.uk
4. The Consumer Panel brings together a wide range of relevant experience. This includes financial services regulation, working with vulnerable consumers, consumer protection, consumer education, front-line money advice, legal expertise, competition policy, public policy analysis, market research and media.
5. There are currently eleven members of the Panel as listed below (for further information on individual members, see the Panel's website).

John Howard (Chairman)
Adam Phillips (Vice Chairman)
Caroline Gardner
Harriet Hall
Tony Hetherington
Stephen Locke
Nick Lord
David Metz
Paul Salvidge
Robert Skinner
Carol Stewart