19th September 2024

Thoughts on 2 Tier Keir and Inducements

I am sure that those financial services professionals with time served will recall that many years ago restrictions were brought in by the FCA regarding inducements given or received in regard to financial advice and portfolio management under an extension of MIFIDII. 

What is classed as an inducement by the FCA? 

An inducement is a benefit offered to a firm, or any person acting on its behalf, with a view to that firm, or that person, for adopting a particular course of action. This can include, but is not limited to, cash, cash equivalents, commission, goods, hospitality or training programmes. 

Article 26 of the MiFID implementing Directive 2006/73/EC ("Level 2 Directive"), entitled "Inducements", sets further requirements in relation to the receipt or payment by an investment firm of a fee, commission or non-monetary benefit that could, in certain circumstances, place the firm in a situation where it would not act in the best interests of the consumer. 

Details of the review were published in April 2016. The key findings were that “Hospitality provided or received did not always appear to be designed to enhance the quality of service to the client”.

It also noted that “Hospitality that is not designed to enhance the quality of service to clients is offered in connection with other benefits that do meet the requirements citing instances of sporting activities like playing golf or attending rugby games provided after participation in training events. Evening dinners, which were not themselves designed to enhance the quality of service to clients, were also provided to local attendees after conferences.

So, if all these restrictions were placed upon financial services professionals all those years ago it seems quite disingenuous that the Prime Minister has been given, and accepted, more freebies than any other MP since the 2019 general election, more than £107,000 in fact.

Sir Keir had allegedly been advised that his willingness to accept gifts could cause him political damage – but “2 Tier Kier” ignored this and said it was within the rules. 

That is seen now to be yet another example of one rule for Sir Keir but not for others.

Politics is a rotten game played over many years by an awful lot of less that suitable people.

I think that financial services professionals will reflect upon this gross abuse of position and privilege and no doubt feel a sense of schadenfreude for “2 tier Keir. As one newl elected MP put it “I do not want to be governed by a paid man”. 

Could it be that all these gifts including clothes, glasses and Taylor Swift tickets place the Prime Minister in a situation where he would not act in the best interests of the electorate, instead favouring, mabe even ensuring, more positive outcomes for unelected party donors’ interests and business activities?

And how can "Article 26 of the MiFID implementing Directive 2006/73/EC" continue to be fair and reasonably executed if the head of the country is doing the same thing MIFID was designed to put a  stop to and has done so?

It will be interesting watching this one play out…

Just a thought!

Panacea Comment, Regulation