Inducements
Definition
Fees, commissions, or non-monetary benefits paid or provided to or by investment firms in connection with investment services. MiFID II restricts inducements to ensure they do not impair firms' duty to act in clients' best interests, requiring quality enhancement, disclosure, and proper management of conflicts of interest.
Regulatory Context
The EU is considering an outright ban on inducements for retail investment products as part of the Retail Investment Strategy. The UK and Netherlands have already banned commission payments for retail investment advice and platform services. The debate around inducements remains one of the most contentious in EU financial regulation.