18 October 2017

Kemmer: MiFID II undermines the trust between customer and bank

  • MiFID II will overhaul European regulation of investment services
  • Changes will cost banks in Germany one billion euros
  • Information overload for bank customers

The Association of German Banks is critical of the far-reaching effects of the new European directive MiFID II on banks and customers. “Europe needs harmonised standards of market transparency, investor protection and risk management,” said Michael Kemmer, General Manager of the Association of German Banks, in Frankfurt. So MiFID II (the new Markets in Financial Instruments Directive) was in principle welcome. Naturally, a huge amount of time and effort was involved for banks and customers. Many banks would have to send out tons of paper by the end of the year to comply with the information requirements.

“Banking regulation has lost sight of the big picture,” criticised Kemmer. “A large number of good individual measures don’t necessarily make a coherent whole. At over 20,000 pages, the sheer size of MiFID II shows that it is mired in detail and goes far too far.”

The costs involved had also got out of hand. “We expect up to one billion euros to be spent on implementation, and that’s without the running costs. The banks could put that money to good use elsewhere,” Kemmer added. In view of this additional pressure, MiFID II would force all banks to fundamentally rethink their business models. “There are already signs that banks will no longer be able to offer all their customers every service and every financial product.”

It was also impossible to understand why customers should not be able to opt out of telephone recordings, for instance. Kemmer: “Such broad requirements to record telephone conversations help nobody and certainly aren’t in the customer’s interest. They merely undermine the trust between customer and bank. This aspect of MiFID II needs to be reviewed and adjusted.”

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