Regular share building services could be under threat because of new European regulations, says Gavin Oldham, chief executive of the Share Centre. The broker’s Regular Investment Service (RIS) may be pulled because of a new requirement to produce monthly contract notes when the regulations come into force this November.

RIS allows investors to invest regular monthly sums of between £20-£750, made possible by a £2.50 maximum commission charge. The service, which aggregates many small orders to make bulk purchases, relies on an exemption from a Financial Services Authority (FSA) requirement to post written confirmation of deals within 24 hours.

Now newly proposed FSA rules, drafted in response to the European Union’s Markets in Financial Instruments Directive (MiFID), intend to remove this exemption. Oldham says: ‘This is starting to give us concern and services may be adversely affected, it costs a lot of money to send out contract notes.’

Registrars have already raised concerns about the impact of the contract note requirements on Dividend Reinvestment Plans (DRIPs). DRIPs, which charge as little as 0.5% commission to automatically use your dividend payments to buy more shares, work on similar principals to share building services.

More than half of the UK’s leading FTSE 100 companies currently offer DRIP schemes to private investors. Registrar Computershare, which manages many of these schemes, says companies may no longer find it cost effective to provide DRIPs.