The Association of International Life Offices (AILO) is warning
that proposed EU regulation on investor protection and commission
prohibition may unintentionally harm consumers and policyholders’
interests.

AILO believes that including similar
provisions to those in the Markets in Financial Instruments
Directive II (MiFID 2) in the Packaged Retail
Investment Products legislation and the Insurance Mediation
Directive II would result in a narrower choice of investment
products and make it harder for clients to obtain independent
financial advice.

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AILO has written to Sharon Bowles, MEP for
South East England and Chair of the European Parliament’s Economic
and Monetary Affairs Committee with the warning, highlighting in
the letter the damage that might be done by the legislation.

According to AILO, insurers would no longer
have access to independent distribution channels and would be
prevented from competing in local markets because of the
prohibitive costs of developing a tied sales force in each member
state.

Meanwhile, AILO argues commission prohibition
would result in a significant barrier to market entry and therefore
conflict with the fundamental EU freedom to provide cross-border
services. This would in turn reduce competition and consumers’
choice of products,

Claudia Lang, chairman of AILO, said: “We
believe that a prohibition on commission for insurance PRIPs would
jeopardise consumers’ access to independent advice. Surveys show
that consumers are generally not able or willing to pay for
financial advice up front.”

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