On 21 February 2022, the European Commission published a consultation on a new type of suitability assessment for retail investors, which aims to better support them in their investments. This consultation precedes the forthcoming review of the retail investment strategy.

The ABBL does not support the proposal for a standardised retail investor assessment regime.

First and foremost, we consider that the assessment of suitability and appropriateness is a crucial step in the area of customer service, so only minor adjustments should be undertaken at this stage. 

Furthermore, a single standardised questionnaire would not, in our view, do justice to the differences between types of retail investors. It would not effectively capture information about the customer's knowledge and experience, risk appetite and personal preferences. In addition, the type of client is also relevant. The 'standard' retail client might be happy with a standardised scheme, but the more sophisticated a client is, the more they want a tailored service.

Several aspects of the proposal would have negative consequences for clients and professionals:

  • Assimilation of risk category: by converging all client types, the risk classification would be the same for all client types. This means the same risk assessment and the same exposure. An accurate and efficient risk assessment should be linked to the specific investment risk level for a given client. 
  • Cost aspect and compliance: Implementation costs will be high, which will again put a burden on market participants to comply with the new regulation. Particularly in the current context, where new requirements to incorporate client suitability preferences already have to be implemented by 2 August 2022.
  • Standardisation of investment: the allocation of investments would become more standardised and therefore reduce investment options for savers and sources of funding for small and medium-sized enterprises.

On the points of data portability and sharing, we support the possibility for the client to choose where and by whom their investment is processed. To do so, data sharing must be done with the appropriate permission of the client, in strict compliance with the GDPR, and result in fair treatment among market participants. 

Ultimately, this desire for standardisation and simplification could lead to a less open investment architecture. It would prevent many people from accessing certain types of investments that they could access using a banking service. 


By Marilyn Rinck