While other European countries have scrapped commission payments for financial advisors, the German government sees no reason to limit the consultants’ profit-making abilities.
Germany says there are no convincing arguments to copy laws introduced in Great Britain and the Netherlands, Handelsblatt has learned from the federal government’s response to a parliamentary inquiry by the Green Party.
Great Britain scrapped the possibility for advisors to charge commission payments for the sale of financial products in 2013, 2 years ahead of the Netherlands, which introduced a similar law in early 2015.
But German government officials said the experiences in Great Britain provided a tale of caution for the implementation of such regulations in Europe’s largest economy.
“The result are supply gaps, as providers concentrate on wealthy clients with a high income and as many customers no longer are able or willing to pay the high fees,” the German government said in the response.
Government lawmakers therefore intend to stick to their approach of a dual commissions system that allows for financial services both including and free of additional fees, the reply concluded.
Consumer advocates of the Green Party don’t agree. “To conclude from the experiences of other countries with prohibitions of commissions that everything is free of error here in Germany, shows how short-sighted the government acts,” Nicole Maisch, the Green’s spokeswoman for consumer policy, told Handelsblatt.
Frank Drost is a Handelsblatt editor in Berlin, covering financial supervision and banks. To contact the author: email@example.com