Deputy Chairman FECIF
How much do we pay for over-regulation?
Over-regulation of financial services in the European Union is a well-recognised fact, even among the bureaucracy in Brussels. The key feature of all those MiFIDs, IDDs or GDPRs, however, is not its devastating effect on the (small and medium-sized) businesses themselves, but its detrimental cost to the customer. It is here that hope resides. Hope that the savage regulatory movement will be stopped and reversed; by the man and woman in the street, should the whole circus get too costly for them. So, how much does the regulation really cost and where is the breaking point?
First, there are explicit costs. The direct amount of money your asset manager, for example, has to pay for new compliance officers, lawyers´ invoices and paperwork. These costs will often be intentionally underestimated by the regulators. Such as it was with the Czech transposition of the IDD directive, which claimed that “additional costs are fully appropriate when compared to industry earnings”. Mind you, this assertion is related to law with about ninety new paragraphs (!!!). But you, dear customer, should not be fooled by such commentaries – because in the end, YOU will pay all those costs, which will translate into your fees and charges.
Then there are implicit costs. Less visible, intangible “payments” related to...