The publication of the European Commission’s long-awaited EU Retail Investment Strategy is an important moment, as creating the necessary conditions to grow retail investor participation in capital markets is key for the future of both the European economy and EU citizens. Within the strategy, we see positive elements which the fund industry has long encouraged, such as digital-by-default disclosures, the preservation of both fee- and commission-based distribution models, and comparable rules for all types of investment products. These measures would leave investors with access to financial advice, improve the usability of disclosures and increase clarity.
However, it remains to be seen whether the full breadth of additional rules envisioned by the strategy will empower retail investors by providing a more appealing consumer journey and better outcomes. Enforcing existing investor protection rules and avoiding information overload would be a good starting point, and care should be taken not to unduly increase the complexity of disclosures and compliance for little gain. Regarding potential value assessments, we would stress that cost is only one of many measurements of value and that value means different things to different investors. There should be scope for other factors to be taken into account, like sustainability goals or income generation for instance. How quantitative benchmarks (to be developed at a later stage by ESMA) would work in practice is not yet clear.
Tanguy van de Werve, Director General at EFAMA, commented; “We need a Retail Investment Strategy that fosters a positive investment culture across the EU and streamlines the investor experience. The financial security of EU citizens and the value of their life savings are at stake. Each policy initiative proposed needs to have a strong rationale, with the impact for end-investors and the competitiveness of EU capital markets clearly understood. EFAMA remains committed to supporting the European Commission and co-legislators in their ongoing efforts regarding this crucial matter.”
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