Capital Markets Union (CMU)
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, “A Capital Markets Union for people and businesses - New Action Plan”.
This Action Plan set out 16 legislative and non-legislative measures to deliver on three main objectives:
- to support a green, digital, inclusive and resilient economic recovery - with a focus on SMEs;
- to make the EU an even safer place to save and invest long-term;
- to integrate national capital markets into a genuine Single Market.
The 16 actions include actions of importance for intermediaries, such as:
- increasing the quality of financial advice (the Commission will look into the feasibility of a pan-EU label for financial advisors);
- an assessment and review of the rules related to inducements, investment advice and information disclosure.
Retail Investment Strategy (RIS)
The European Commission is preparing a proposal for a Retail Investment Strategy (RIS) which looks in parallel at IDD (IBIPs chapter), MiFID II and PRIIPs, and which should focus on the interests of individual investors. It is expected to propose its RIS in early April 2023. Thanks to the rather recently introduced national rules based upon IDD and MiFID II, consumers have transparent choice between highly regulated and supervised models to pay for the advice and services of intermediaries. This system allows all consumers to have access to services and advice from intermediaries for pensions, savings, investments and insurance-based investments.
As BIPAR understands from publicly available information, the European Commission is currently considering whether or not to propose a complete and overall ban on commissions in all EU Member States for these services.
BIPAR believes a ban would not be proportionate and would not respect the specificities and/or differences between the various EU markets and investment products. Such a ban would create an advice gap for many consumers – in particular for smaller savers.
Here are some BIPAR papers supporting our views:
- A case for choice of remuneration systems in relation to investment advice (October 2022)
- BIPAR Response to EIOPA consultation - Advice to the European Commission regarding certain aspects relating to retail investor protection (February 2022)
- BIPAR Input - ESMA Call for evidence on the European Commission’s mandate on certain aspects relating to retail investor protection (December 2021)
- BIPAR Response to the European Commission’s consultation on the Retail Investment Strategy for Europe (August 2021)
The European Commission and the ESAs launched various consultations on the RIS in 2021 and 2022, all of which BIPAR responded to. On the Commission’s side, these include a general consultation on the RIS in 2021 and a targeted one in 2022 on options to enhance the suitability and appropriateness assessments, and which proposes the introduction of a standardized retail investors’ assessment regime and a personal asset allocation strategy (BIPAR criticized this approach). 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 European Commission’s DG FISMA also published in August 2022 the final report it commissioned for RIS from a consortium of consultants (Kantar, in cooperation with “milieu” and CEPS) entitled “Disclosure, inducements, and suitability rules for retail investors study”.
BIPAR’s overarching key points with respect to the RIS have been:
- the existing legislative framework is sufficient;
- insurance is not investment;
- the need for regulatory stability, choice regarding remuneration/inducements/advice;
- we support improved financial literacy;
- the need for a level playing field (open finance / digital innovation);
- the 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.
Once the Commission has proposed the text, it will be sent to the European Parliament and the Council for the co-legislation procedure. It is expected that the majority of the discussions on the RIS will take place under the Spanish Council Presidency in the second half of 2023.