The parliamentary group of the Greens has spoken out in favor of a commission ban for investments. “We expressly welcome the fact that EU Finance Commissioner Mairead McGuinness is putting a cap and ban on commissions up for discussion,” explains financial policy spokeswoman Katharina Beck in a statement available to the SZ. It is good that she is once again putting misguided incentives and conflicts of interest in commission-based financial sales on the agenda with her small investor strategy.
In a letter to the CSU MEP Markus Färber in December, McGuinness showed sympathy for a ban on commissions. It could lead to cheaper products and more independent advice. She cited Britain and the Netherlands as examples, where a ban on commissions has resulted in lower costs for consumers. The EU Commissioner intends to present the reform of her retail investor strategy by the end of March.
EU Finance Commissioner Mairead McGuinness initiated the ban on commissions when brokering financial investments to small investors.
(Photo: Johanna Geron/AFP)
Consumer advocates have long criticized the common practice in the financial industry of paying commissions to brokers of funds, insurance and other financial products. Brokers often receive a commission of three to five percent of the amount invested for closing and one to two percent per year for holdings. This is common for almost all banks, insurance companies and other institutions.
Critics are of the opinion that this leads to a conflict of interest: the intermediaries have a financial self-interest in selling their customers products that are as expensive as possible. In addition, the high commissions, especially for long-term contracts for old-age provision, led to high losses for customers. There is a negative compound interest effect compared to cheaper products, such as ETF savings plans. Customers suffered high losses as a result.
The number of intermediaries who sell financial products on commission in savings banks, banks and insurance companies is estimated at 300,000 in Germany. A commission ban would have serious consequences for them. The financial sector may then only charge a fee for the advice.
Finance Minister Lindner was “very concerned” about the plans
The Greens would welcome that. “Serious deficiencies in investment advice, which came to light during anonymous test purchases by the financial regulator Bafin and Stiftung Warentest, show that the measures taken to date, which primarily focus on transparency, have not solved the problems,” explained Katharina Beck. In the case of unit-linked life insurance, for example, on average about a quarter of the premiums paid are not used for capital formation, but go to the insurer. This is difficult for consumers to see. They needed independent advice “where they can be sure that they will receive a product range that is tailored to their needs,” says Beck. That would also make the capital market more attractive for them.
With their statement, the Greens open up another area of conflict with their coalition partner, the FDP. Finance Minister Christian Lindner expressed his “very concerned” about her plans in a letter to EU Commissioner McGuinness at the end of December. It is important to let the investor decide whether he wants to be advised on a commission or fee basis. This “differentiated approach” should be retained. A commission ban would be a “significant step backwards” in efforts to strengthen investing in European capital markets, Lindner wrote.