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The European Commission published its consultation (the "Consultation") on the review of the Markets in Financial Instruments Directive ("MiFID") in December 2010. The Consultation, which closed on 2 February 2011, sought views of market participants, regulators and other stakeholders on possible changes to MiFID's regulatory framework. The Commission Services envisage that the responses will provide "important guidance" in preparing a formal Commission proposal, currently scheduled for adoption in the second quarter of 2011.

In advance of the formal Commission proposal, this paper considers some of the issues raised by the Consultation's suggested changes to the regulation of investment advice, and in particular the extent to which proposed amendments might conflict with FSA Rules made as part of its Retail Distribution Review ("RDR").

If implemented in full, the changes proposed by the Commission would increase the duties owed by firms to clients to whom investment advice is provided, notably in the post-trade context. There is little in the Consultation by way of justification for the changes, and no adequate cost-benefit analysis, although the formal Commission proposal is to be accompanied by an impact assessment.

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