'A large part of the European investment system is incentive-based' and, for this reason, 'very few European entities are going to be set up as independent'. This is the opinion of Alfredo Oñoro, CECA's Director of Regulatory Compliance, who yesterday gave a briefing on MiFID II and its main new features. The definition of advisory services as independent or non-independent is one of the big decisions that credit institutions and investment services firms will have to make in January 2018, when MiFID II comes into force, a decision that will have a direct impact on business models.

This reality in continental Europe today need not, however, be detrimental to the end-investor, Oñoro believes. In fact, it does a great deal of good: increase financial inclusion. 'Incentives in the distribution of investment products support a large part of the cost of the networks and allow them to reach more places', he justifies.

Although a priori few entities will define themselves as independent when advising their customers on investment matters, the fact is that in the case of Spain, several large banking groups have already declared their intention to opt for a mixed model that includes both independent and non-independent advice. Regarding this possibility, Ceca's Director of Compliance believes that 'the most transparent approach to implementing a mixed advisory model would be to have a structure of subsidiaries', where different subsidiaries of the same group provide these services separately. However, he points out that 'it may not be necessary', depending on the final form of the Spanish transposition, as advisors and specialised bankers within the same entity could offer these services through different channels, i.e. to different customer segments, as long as each professional only offers one of them.

For incentives to be valid, in the area of non-independent advice - in independent advice they will be strictly prohibited - they must be designed to enhance the quality of service to the customer. Within this condition, MiFID II refers to three scenarios in which it considers that it increases the quality of the service, although as it is an open list at European level, countries could transpose the directive into their respective national legislations together with extra scenarios. This is likely to be the case in markets such as Germany, Italy and France, which will have - Germany has already approved it - or will try to have a fourth scenario of a different nature in order to maintain their local particularities in the distribution of investment products and not have to follow the Anglo-Saxon model in its entirety. However, Spain, despite lobbying by industry and Inverco, seems unlikely to follow the path of its neighbours.

Spain may not have a fourth scenario in the validity of incentives in distribution.

'The big surprise of the draft transposition of MiFID II in Spain is that it was drafted without a fourth scenario and with a closed list. And that doesn't make sense', criticises Oñoro. 'A closed list would only make sense if it included a fourth scenario', he argues. The fourth scenario proposed by Inverco 'was not advisory, but it was very close to it, with the necessary information and tools in the pre-sale and post-sale phase', he recalls.

At the meeting, Oñoro conveyed that he hoped that this be extended to the Spanish industry as a whole, especially the fund industry. 'We want a closed list if it includes the fourth scenario and, if not, an open list so that everyone can assume their own risks. Basically', he adds, 'what we want is for all entities to have equal distribution possibilities and freedom of decision, without the need for them to drastically change their distribution model'.