Inspired to some extent from BETTER FINANCE’s 2017 Briefing Paper on mis-selling of financial products as well as its study into the issue of Closet Indexing at the beginning of the year, the European Parliament's ECON committee has now commissioned studie into the mis-selling of financial products to European individual investors, looking at how and to which degree EU rules for the sale of financial products to retail customers were implemented.
One of the areas of focus of the study will be "the marketing of financial products regulated by MiFID, UCITS or AIFMD", including "the respect of the ‘best interest’ principle, ‘closet indexing’ practices and the obligation to publish benchmarks as laid down in MiFID".
BETTER FINANCE is pleased that the European Parliament is taking the issue of mis-selling seriously, especially since many instances across the EU have already been flagged by BETTER FINANCE member organisations, including misleading behaviour by the Belgian Banks Fortis and Dexia, the sale of subordinated debt and other junior liabilities by distressed Spanish, Italian and Slovenian banks to retail investors and the issue of “floor rates” clauses in mortgages products in Spain.
This would also constitute the ideal opportunity for the European Parliament to look into the widespread misleading practice of closet indexing, and the violation of benchmark performance disclosure rules.