Following persistent large-scale mis-selling of financial products worldwide, ensuring a high level of financial consumer protection ranks high on the regulatory reform agenda in the aftermath of the global financial crisis. The provision of financial advice is one of the most important contexts in which consumers accessing the financial system may need protection. While financial advisors can help overcome asymmetric information problems and limitations of consumers’ own decision-making capacity, remuneration structures have considerable potential to misalign incentives between consumers and advisors. Third party inducement-based remuneration generates particularly serious conflict-of-interest risks and has been a significant driver of mis-selling and poor-quality advice internationally. In response, a number of jurisdictions, such as Australia, UK, and the Netherlands, as well as the EU, have introduced regulatory measures designed to bring greater transparency to the financial advice industry and to address the problem of conflict of interests. These include, inter alia, limits or bans on third party inducements (fees, commissions or monetary and non-monetary benefits) from securities issuers and financial product providers. However, the effectiveness of the newly adopted measures in improving the quality of financial advice and ensuring a high level of financial consumer protection still needs to be proved.
The aim of this interdisciplinary international conference is two-fold: (1) to study emerging legal regimes for the provision of financial advice in the EU and beyond, both with respect to standard-setting and enforcement; and (2) to explore the actual and potential impact of such regimes on the behavior of consumers and financial advisors in financial markets. In particular, the conference will address the following questions. What are the regulatory objectives behind and what is the scope of the inducement bans and other rules governing remuneration of financial advisers? How do such rules fit into the overall post-crisis regulatory design for retail financial markets? What are the regulatory challenges posed thereby? How are these rules enforced? Only through administrative law means or also through private law means? If so, is there a co-ordination between administrative and judicial enforcement? How do consumers perceive financial advisers and the changes in remuneration structures affecting the provision of financial advice? Are they willing to take financial advice when they are to pay an advisor directly? Does professional financial advice lead to better household decision-making? How does financial literacy affect financial decision-making by households? And how do the changing remuneration structures affect the market for financial advice? Are financial institutions willing to provide financial advice to (vulnerable) consumers and, if so, with respect to what type of financial product?
The conference will address these questions from a legal, comparative, and economic perspective bringing together leading legal scholars and economists. In addition, it will create a platform for the debate on this topic among academics, financial supervisors, legal practitioners, consumer associations, and the financial services industry.
|Last modified:||30 November 2017 10.30 a.m.|