Why is the ban on inducements for investment firms introduced?

The ban on inducements is introduced to increase transparency and to reduce the perverse incentives in investment services. The ban will change and simplify the cash flows between investors, providers and investment service providers. It will ensure that the investment services that are provided to investors are fair, honest and professional. Whereas in the past there could have been an incentive to guide investors towards the providers that offer the highest commission, this incentive will now be removed.

This will give investors insight into the costs of investment services. Furthermore, by moving to a direct fee model, investment firms are better able to demonstrate their independence to investors. This makes it easier for investment firms to clearly show the added value of their financial services.

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