"Fair compensation and full harmonisation are necessary to provide adequate protection for consumers of financial products whose investments fall into fraudulent or negligent hands." said ALDE MEP Olle Schmidt MEP (Folkpartiet, Sweden), ahead of today's vote on his report on investor-compensation schemes, which is likely to receive the backing of the Economic and Monetary Affairs committee in the European Parliament.

Compared to the Commission's draft proposal, the Schmidt report sets more ambitious provisions to protect consumers who decided to invest money in financial instruments but are badly let down by their financial intermediaries and are unable to recover the money in cases of malpractice. It fixes a common higher level of compensation of EUR 100 000 (instead of the EUR 50 000 proposed by the Commission) and requires a full harmonisation in Member States where current practices open up the risk of arbitrage.

Another innovation in the report by Mr Schmidt, is the inclusion of "bad advice as a cause to entitle consumers to compensation. How many times have we heard of cases of conflict of interest of businesses that recommend services to their clients without declaring a vested interest themselves, or even worse of companies that have manifestly failed to fulfil their obligations when providing or advising on investment services to clients? Consumers should not have to always pay the price of malpractice."

"This directive has been conceived to be consumer friendly, above all to give them confidence in the marketplace that will in turn encourage investment in growth industries."

In relation to the Commission's proposal to also include enhanced protection to the securities investment fund (known as UCITS), the Economic Affairs committee reached a compromise, presented by Mr Schmidt: "UCITS has been proven so far to be a well protected and a safe product, therefore we call on the Commission to assess the costs and benefits of extending the scope of this directive to UCITS."