Ben Goh, secretary of the Compliance Register, a regulatory consultancy, has claimed that consumers will reap the benefits of new legislation designed to create a single market in financial services throughout the EU.

The Markets in Financial Instruments Directive (MiFID) will come into effect on 1 November to replace the 1995 Investment Services Directive. Goh said, ‘Ultimately, MiFID should provide extra protection for investors and may lead to an improvement in services.

‘For example, fund houses will now have to define the kinds of investors for whom their products are appropriate. This gives the consumer more recourse to compensation from either an adviser or the product provider in the event of poor performance if it can be proved they were mis-sold the product – that it was clearly not suited to their individual circumstances – or that it was actually not appropriate for the target audience defined by the provider.’

When it comes to share dealing, MiFID will allow firms to provide services across borders. ‘Stock exchanges and stock-trading venues across Europe will have to be able to prove ‘best execution’ on deals. That’s not just in terms of price but things like speed and efficiency of execution and settlement too.”

The MiFID legislation will cover most firms currently regulated by the FSA, including fund managers, wealth managers and many IFAs.