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2.1. In financial regulation, especially where retail investors are concerned, it is often better
to prevent than to cure. Consequently, guidelines should be made to prevent malpractices
and not so much to establish standards of prudent behaviour that may later provide a basis
for sanctioning or liability, as retail investors are often not in a capacity to seek adequate
redress for any wrongs they have endured. Guidelines only serve this purpose of preventing
malpractices if followed diligently by both market participants and authorities.
In respect of market participants it is of paramount importance that they internalise these
guidelines and secure the proper training of staff, especially the front office staff that deals
with retail investors, and that they avoid remuneration policies that may distort proper
incentives of their staff. We are pleased to see that these considerations are addressed in
the draft guidelines.
In respect of authorities, it remains important that they abide by the principle of a single
rulebook and seek to exercise their authority and supervision in a harmonised way both to
achieve a uniform level of investor protection throughout the Union and to provide a level
playing field for market participants which will facilitate cross-border activity and thereby
increase the competition and the number of services and products offered to European
investors. At this point in the development of an integrated European financial market,
supervision is probably best placed with national competent authorities, but just as this joint
consultation is evidence of the need for the three ESAs to cooperate through their Joint
Committee to seek a unified approach, so do we believe that it may in time be necessary and
efficient to engage the ESAs in direct supervision of cross-selling transactions in order to
secure a truly pan-European approach. Although cross-selling transactions by their very
nature often cover different sectors, the need for market supervision would indicate a special
role for ESMA in this area, which may rely on the Joint Committee to facilitate the necessary
cooperation with the two other ESAs.
2.2. The problems caused by cross-selling have mostly been explored in the still new field of
behavioural finance. Although not in a position to engage in a scholarly debate on the merits
of behavioural finance, we find that many empirical findings correlate with common sense
perceptions and every day experience of how retail investors make choices. Especially, we
are convinced that when faced with cross-selling transactions including as they do a
combination of services or products, retail investors may find it more difficult to make
informed decisions than when confronted with the individual products or services in isolation.
This is the very reason why we support the issuance of guidelines in this area.
As cross-selling transactions may offer the benefits described in the joint consultation, we
find it important, however, that retail investors are not precluded from access to these
transactions either in the form of outright bans on particular forms of transactions or by
making the transactions so costly or burdensome for market participants that they make
them exclusive for non-retail investors only. We believe that what is needed is sufficient,
clear and intelligible information (transparency) and, as mentioned above, sufficient training
of staff to assist retail investors in this information process and the avoidance of
remuneration policies that may distort this process. Given sufficient transparency and a well-