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T We appreciate that this was also echoed by the Commissioner-Designate Maria Luis Albuquerque during her confirmation hearing in the European Parliament.
In light of this and the need to urgently advance a Savings and Investments Union, it is essential to subject the Retail Investment Strategy (RIS) to a “competitiveness check”. As it currently stands, the RIS will not achieve its initial goal of increasing retail participation in European capital markets.
Indeed, the RIS adds further complexity and bureaucracy to the already heavily regulated frameworks that govern the distribution of investment and insurance-based investment products (IBIPs), with impacts for both firms and retail investors. This approach contradicts the new Commission’s commitments to reducing red tape for market participants, fostering a simpler regulatory environment and strengthening the attractiveness of EU financial markets.
We have hope that EU policymakers can use the upcoming trilogue negotiations to refocus the RIS on what matters: enabling citizens to invest in the capital market without imposing excessive burdens on market participants. For this to happen, policymakers must, at a bare minimum, focus on:
Simplification for firms and retail investors. Overly complex and overlapping rules risk stifling retail investor engagement and increasing firms' operational costs, which are ultimately borne by consumers. The RIS, as currently proposed, would significantly increase the reporting burden and record-keeping requirements, adding layers of bureaucracy and red tape for market participants. Additionally, the introduction of numerous Level 2 and 3 empowerments would create further uncertainty and complexity for companies. The RIS should aim to streamline regulations and avoid imposing new, disproportionate compliance requirements that create obstacles for both investors and the market.
Streamlined sales processes for retail investors. An easy, affordable, and simplified investment journey will be vital to attracting more retail investors. Unfortunately, the current RIS proposals would make the investment process longer and more burdensome, adding conditions, tests and disclosure obligations. For instance, the advice process for purchasing products can extend to over two hours for certain products, discouraging savers from investing or nudging them towards less regulated platforms and products. The RIS should strive to reduce these barriers and ensure that investors can access European-regulated products in a leaner way.
Reduction of information overload. Transparency is important for empowering investors to make informed decisions. At the same time, the RIS currently imposes excessive and overly detailed cost disclosures and warning obligations which could overwhelm retail investors and could make investing less appealing. The RIS should improve and focus on meaningful and relevant disclosures. Emphasising key product benefits, such as financial guarantees, ESG characteristics and other qualitative features that drive consumer investment decisions, will encourage greater participation in the EU financial markets.
These steps are just a starting point for the RIS to foster a regulatory framework benefiting both retail investors and the wider EU economy. In this spirit, the financial industry also appreciates the Commission’s strong commitment to deploying the Savings and Investments Union and driving retail investment across the EU, while working with Member States on key actions necessary to strengthen our capital markets, such as unlocking the potential of private and occupational pensions, targeted tax incentives and financial and insurance literacy.