Paused discussions on proposed regulations for retail investment.
EU Retail Investor Rules Talks Delayed to Second Half of the Year
Discussions between the EU Parliament and the Council on the future regulations for retail investors, a part of the Retail Investment Strategy, have been postponed until the latter half of the year. The current Polish EU Council Presidency has cancelled the scheduled trilogue meeting for June 3, with the intention of passing the legislative process to the Danes, who will hold the EU Presidency from July onwards.
The Danish presidency will now take over the negotiations, which were previously stalled due to diverging views among member states on how to simplify the text. According to an internal communication, the options are not yet sufficiently developed for the Council to adopt a definitive position. Consequently, it was deemed unnecessary to meet again with the EU Parliament negotiators at this point.
The retail investor rules include requirements for providers of financial products, such as ensuring appropriate value for money through comparisons with similar financial products and increased cost transparency. The European Commission had initially proposed a ban on commissions for advisory-free distribution of financial products, but this partial commission ban was removed from both the Council's and Parliament's versions.
The Retail Investment Strategy has been one of the most contentious legislative proposals in the EU. The EU Commission has expressed its intention to facilitate an agreement between Parliament and Council on the Retail Investment Strategy, but warned that it may withdraw the proposal if the negotiations fail to achieve the strategy's intended objectives.
Recent proposals to simplify the rules include the EU Commission's suggestion that peer-group comparisons should be based on publicly available data, while the Dutch advocated waiving the requirement to collect comprehensive information on the financial situation of certain clients. The French and Czechs have proposed dropping the requirement that advisors must verify the client's ability to absorb financial losses.
The financial industry has expressed criticism towards the Retail Investment Strategy, with the German Investment Funds Association suggesting that the Commission should withdraw the strategy altogether. The German Banking Industry Committee is similarly critical, urging the retail investor strategy to be simplified or shelved.
The overarching goal of the Retail Investment Strategy is to reverse the trend of limited retail investor participation within the EU's financial markets. The final rules are anticipated to come into effect several years later, with ongoing regulatory evaluations continuing into the mid-2020s.
- The retail investor rules, a part of the Retail Investment Strategy, involve regulations for financial businesses, including requirements for providers of financial products to ensure cost transparency and provide value for money.
- Politics and policy-and-legislation are intertwined in the ongoing discussions over the Retail Investment Strategy in the EU, with the Danish EU Presidency taking over the negotiations from the Poles.
- General news outlets have reported that the financial industry, including organizations in Germany, have expressed criticism towards the Retail Investment Strategy, suggesting suggestions for simplification or even withdrawal of the proposal.
