The EU Capital Markets Union (CMU) is a plan to create a Single Market for capital. The aim is to get money - investments and savings - flowing across the EU to benefit consumers, investors and companies, regardless of where they are located.

A first Green Paper on CMU was published in 2015, followed by various follow-up measures, a key one being the 2020 CMU Action Plan setting out 16 legislative and non-legislative measures, including actions of importance for intermediaries, such as increasing the quality of financial advice and an assessment and review of the rules related to inducements, investment advice and information disclosure.

Regarding the latter, the Commission has prepared a Retail Investment Strategy (RIS) which should focus on the interests of individual investors:

“An individual investor should benefit from: (i) adequate protection, (ii) bias-free advice and fair treatment, (iii) open markets with a variety of competitive and cost-efficient financial services and products, and (iv) transparent, comparable and understandable product information. EU legislation should be forward-looking and should reflect ongoing developments in digitalisation and sustainability, as well as the increasing need for retirement savings.”

The RIS looks in parallel at IDD (IBIPs chapter), MiFID II and PRIIPs.

The European Commission and the ESAs launched various consultations on the RIS in 2021 and 2022, all of which BIPAR responded to. At the end of April 2022, the 3 ESAs published their technical advice to the Commission (EIOPA on IDD IBIPs, ESMA on MiFID II and the joint ESAs on PRIIPs). 

The Commission also ordered an external study on inducements, investment advice and information disclosure. This “Kantar” report was published on 2 August 2022. BIPAR and other stakeholders criticized certain of its figures. The Commission published a corrigendum in February 2023.

In the run-up to the publication of the RIS, Commissioner for Financial Services Mairead McGuinness made several public statements in which she indicated that she was in favour of a ban on inducements.  This triggered a lot of reaction from stakeholders, including BIPAR, and from several Member States who are against bans on inducements. During a speech in April 2023, she nuanced this statement, saying a full ban on inducements would not be part of the RIS, however adding that even if they do not propose a ban on all inducements now, it does not mean a free pass for the financial sector.

 

The publication of the RIS was postponed several times. It was finally published on 24 May 2023 and consists of:

• a proposal for an Omnibus Directive amending the IDD, MiFID II, Solvency II, AIFMD and UCITS;
• a proposal for Regulation amending the PRIIPs Regulation.

 

BIPAR published a statement (see below) following the publication of the RIS and is currently analysing all the proposals in view of the readings and amendments by the European Parliament and the Council. BIPAR will also respond to the Commission’s formal public consultation on its proposals.

 

In the run-up to the RIS, BIPAR’s overarching key points with respect to the RIS were as follows:

• the existing legislative framework is sufficient;
• insurance is not investment;
• need for regulatory stability, choice regarding remuneration/inducements/advice;
• BIPAR supports improved financial literacy;
• need for a level playing field (open finance / digital innovation);
• need for a broad study of consumer behaviour and influence of disclosures on consumer decision-making;
• regarding sustainable investment, intermediaries are willing to assist retail investors but need information from manufacturers.

 

The RIS proposals are now sent to the European Parliament and the Council for their amendments and adoption. Once the Parliament and Council have adopted their respective positions, the trilogue discussions can start. The whole procedure typically takes at minimum 12 months before a final text is adopted.