Investors stung by the endowment-policy and pension-plan mis-selling scandals, and in possession of poorly managed unit trusts that have failed miserably to outperform the FT-SE index, can hardly be blamed for coming to the conclusion that they might just as well make their own investment decisions rather than rely on the men in grey suits. Sadly, however, the European Commission believes that we cannot be trusted to make such decisions by ourselves. Its new Investment Services Directive contains a stinging clause that would oblige execution-only stockbrokers to assess their customers’ competence before allowing them to use the service. Such obligations, the stockbrokers warn, will mean a sharp increase in the cost of trading for millions of small investors. At present, such companies charge as little as £10 a time to buy or sell shares because, unlike pension companies, they do not hive off hefty commissions to an army of ‘personal financial advisers’ employed to push policies to the public. In future, customers may have to pay for an hour’s counselling which they neither need nor want.
The irony is that the measure comes tagged on to a directive that is supposed to open up opportunities for investors, making it easier for them to trade shares across borders. But it is thoroughly in character with the EU. There is very little we are allowed to buy these days without receiving some sort of advice or warning from the company selling it. Buy a bag of peanuts and you have to be warned that it ‘contains nuts’; at least one motorcycle was marketed with a sticker on its mirror stating, ‘Warning: objects seen in the mirror will be behind you.’
The only thing that is allowed to be sold to the public these days with neither warning nor explanation seems to be EU treaties. Can any ordinary citizen recall receiving any documentation warning that the proposed EU constitution will give EU law supremacy over UK law, effectively shifting power from our directly elected parliament to a largely appointed bureaucracy?