As part of its Capital Markets Union action plan (CMU), the European Commission wants to develop policies to increase retail investors participation in EU capital markets. The Commission is working on several policies to reach this goal and will publish a retail investment strategy for the first half of 2022.
On 11 May, the European Commission published a public consultation to gather views and evidence from stakeholders to shape its policies.
The Commission is focusing on the legal framework for retail investment, in particular UCITS, PRIIPs, MiFID II, IDD, PEPP and Solvency II, and wants to find out whether it is coherent, is it adapted to the profile and needs of retail investors?
A coherent framework
The consultations is composed of 13 sections and includes very detailed and specific questions on a broad range of issues such as:
- the comparability of similar investment products that are regulated by different legislation and thus subject to different disclosure requirements
- the different types of investor categories
- fair advice in light of current inducement practices
- financial literacy
- digitalisation, and open market opportunities
- sustainable investing
The deadline to submit contribution is 3 August 2021.
Most of these questions have already been raised or discussed during previous legislative debates (around MiFID II or PRIIPs for instance), and do not come as surprises, however it is interesting to see they are all addressed at the same time in an effort to create a coherent framework.
It is also important to note that as part of its evidence gathering exercise, the European Commission has also launched an extensive study focusing on the different disclosure regimes, the extent to which advice given to prospective investors is useful and impartial and the impact of inducements paid to intermediaries. It involves extensive consumer testing, to ensure that any future changes to the rules will be conceived from the perspective of what is useful and necessary for consumers.
Given the broad ranging nature of this exercise and the focus on the protection of the investor, the very different regimes applicable to different financial products and also national cultures on investor protection, we are likely to witness interesting and lengthy discussions before the adoption of the strategy but also before the adoption of the actual upcoming pieces of legislation.
As this consultation is touching on many issues of interest to the ABBL and its members, the ABBL will be preparing an answer to this consultation and share its experience on the different topics raised, and will closely follow any outcome.
By Aurélie Cassou