Breathe a sigh of relief in the banking lobby: Ampel does not plan to ban commissions – the economy

If the financial lobbyists are to be believed, then the world generally collapses if their demands are not heeded; SMEs no longer get credit, savers get nothing in terms of investment advice. When it was recently learned that a request from the Greens to organize investment advice differently and to replace commission-based advice with fee-based advice had in fact been the subject of a position paper on traffic lights, there must have been a lot of enthusiasm among the banking associations. The case “would prevent a large part of the population from having access to good advice” and therefore lacks solidarity, said Sparkasse chairman Helmut Schleweis. The Volks- und Raiffeisenbanken warned against serious discrimination against “broad sections of the population”. In support, the associations quickly published a study by KPMG, according to which consumers with particularly low and medium investment amounts were “cut off” from the advice given by the fee advice.

The effort paid off: in any case, the issue is no longer reflected in the coalition agreement – the FDP, which wanted to leave everything as it is, was able to win. “It’s really remarkable how powerful the banking lobby still is,” said a former bank boss who declined to be named. Above all, savings banks would have access to all parties thanks to their networking in the municipalities.

Commissions are an important source of income for banks

This decision would have been revolutionary for the financial sector. Ultimately, the goal was to replace commission-based advice for private investors with independent, fee-based advice. The Netherlands, the Nordic countries and Great Britain have had such a ban for a long time and have had good experiences with it. In Germany, however, large sales organizations live on high commissions, which they pass on to customers. In the case of life insurance or a securities fund, this is often five or six percent of the total contributions payable by the client. This can represent several thousand euros per contract. The result: lower returns and lower retirement provision.

Each year German life insurers pay around seven billion euros in acquisition costs for brokers, in 2020 it was 7.5 billion euros – and that’s the amount they charge their clients . Commissions are also an important source of income for banks – also for the maintenance of their lush branch network. According to a study by analysis firm Barkow Consulting, the share of net interest income in the total income of German banks has been declining for years. Conversely, the share of commissions amounts to 27%. In the case of paid advice, the client pays the consultant, in the same way as tax advisers or lawyers. However, fee advice hardly plays a role given the competition from allegedly “free” commission sales.

Consumer advocates have been advocating paid advice for years. What savings banks would call a consultation is actually a sales pitch, financial expert Niels Nauhauser of the Baden-Württemberg Consumer Center wrote on Twitter. It is absurd to qualify paid advice as a lack of solidarity. Fees are freely negotiable and can be staggered according to income. Gerhard Schick of the citizens’ movement Finanzwende also considers that the arguments of the banks are advanced: in practice, consumers “with a small budget” would sometimes have to pay four figures for a life insurance policy.

In addition to financial advice, banking associations have apparently found an audience in the traffic light coalition: the three-pillar model, which is associated with a high proportion of state-affiliated banks, should not be touched, this that the savings banks have praised. The relaxation of fairness rules introduced following the corona pandemic could also be maintained. A “real” European deposit guarantee is also on the agenda, which would meet another requirement of savings banks and Volksbanks. After all, residual debt insurance providers must be prepared for the changes. The sale of these controversial products must be decoupled, which should make their distribution more difficult.

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