BETTER FINANCE (short name for the European Federation of Investors and Financial Services Users) is the public interest non-governmental organisation advocating and defending the interests of European citizens as financial services users at the European level to lawmakers and the public in order to promote research, information and training on investments, savings and personal finances. It is the one and only European-level organisation solely dedicated to the representation of individual investors, savers and other financial services users.

BETTER FINANCE membership has developed since its creation in 2009, and counts today 39 independent, national and international member organisations with a similar purpose from the European Union Member States as well as Iceland, Norway, Turkey, Lebanon and Cameroon.

BETTER FINANCE believes that the financial system exists to serve the real economy and citizens by ensuring the optimal allocation of capital and providing other financial services in the most efficient way. In order to restore trust in financial services, the current dominance of financial institutions over the real economy must be curbed and the primacy of a sustainable real economy promoted.

BETTER FINANCE Key Priorities for the Next Five Years │ 2019-2024


A strong European Capital Markets Union (CMU) requires the trust of citizens as individual investors, policyholders, pension savers and other savers. And defusing the pensions time bomb requires positive and decent real long-term returns to pension savers. Those can only be reached by increasing the attractiveness of the EU capital markets to the benefit of all market participants. BETTER FINANCE, therefore, sees a need for a real renaissance of the CMU, especially as Brexit is looming, and, following CMU 1.0 in 2015 and CMU 2.0 which added several “Actions” in 2017, recommends the following “CMU 3.0” actions for 2019 and beyond:

1. Better access to simple and transparent products

One main aim of CMU 1.0 (2015) was to improve the funding of the EU economy and to offer better returns to EU long-term and pension savers by fostering retail investments into capital markets. BETTER FINANCE recommends the following measures:

  • a. Direct access to simple investment products (such as equities, bonds, index ETFs and UCITS funds) that are getting EU citizens as investors closer to real economy assets, instead of estranging them further into more packaged, complex, opaque and fee-laden products. In particular, at least one alternative investment option in PEPP should allow for the direct investment in equities, bonds and plain vanilla index ETFs. MIFID II should clearly allow intermediaries to advise clients on such simple and direct products and PRIIPs should not apply to plain vanilla corporate bonds and the like as those are already subject to the prospectus disclosures.
    b. A better alignment of distributors’ incentives with clients’ returns by minimizing conflicts of interests in the distribution, in particular by following up on the retail investment markets assessment conducted by the EC in 2017 with an Action Plan, and by addressing short-termism.

2. Make the European capital markets more attractive for EU citizens as savers and investors

The CMU can only succeed if individual investors invest more into the real economy. BETTER FINANCE recommends the following measures:

  • a. Ensure proper enforcement of EU rules against mis-selling. As European Parliament’s and BETTER FINANCE’s studies show, several key EU rules regarding retail investors’, policyholders’, savers’ and mortgage borrowers’ protection are not adequately and consistently enforced. European Supervisory Authorities (ESAs) must use their new product intervention powers.
    b. Use taxes as an incentive, not as a punishment: Provide tax incentives for long-term and pension investors and eliminate existing tax discriminations for individual investors in the EU such as double taxation of dividends, etc.
    c. Increase the responsibility of institutional investors e.g. by establishing a fiduciary duty to exercise all voting rights, disclose securities lending/collateralization and short selling to the end investor/ beneficial owner, and ban the re-lending or re- collateralization of securities.
    d. Impose consistent investor protection and level playing field between the regulated capital markets and the “dark” venues generated by MiFID I and that now capture more than half of capital market transactions.
    e. Introduce cost-free cross-border voting for retail investors within the EU reflecting the increasingly international portfolios of individual investors to help regain their trust and to ensure stronger governance of companies.
    f. Introduce the same level of shareholder protection as a standard all over the EU. Introduce common delisting rules for all EU-Member States.

3. Improve the competitiveness of European capital markets for SMEs

Despite the benefits of public listings, EU markets struggle to attract new issuers. BETTER FINANCE recommends the following measures:

  • a. Increase the attractiveness of EU stock exchanges for EU SMEs in general, e.g. through tax incentives. EU stock markets are still struggling to attract IPOs and London is still the most important market for IPOs in the EU. Therefore, BETTER FINANCE suggests that the Commission builds on the experience and expertise built up in well-established capital markets to find out how to make EU stock exchanges more attractive.
    b. Strengthen the IPO market in Continental Europe. The Commission should review the regulatory barriers to small firms for their admission to trading on public markets to ensure that the regulatory environment for the SME Growth Markets is fit for purpose.

4. Better access to comparable, fair, clear and not misleading information

To be an individual investor is not a full-time job. Therefore, essential information should be provided in the easiest way possible to allow individual investors to understand and compare investment offers. BETTER FINANCE recommends the following measures:

  • a. Improve transparency on performance and fees of all investment products by developing the initial work of the ESAs, and by urgently reviewing the PRIIPS Regulations: reinstate the comparable disclosure of long term past performances relative to the benchmarks of the providers, eliminate the unreliable future scenarios, reinstate intelligible, comparable and comprehensive disclosures on costs and fees.
    b. For Insurance-Based Investment Products (IBIPs), key cost disclosures should distinguish between performance-related ones and risk coverage ones, and disclosures on annuities (pay-outs) must be much clearer and include if/how they will protect clients against inflation.
    c. Simplify and standardize as much as possible the information included in the various key information documents (KIID, KID, PBS, summary prospectus, etc.), which should be short, simple and comparable and thereby easy to understand for investors. It is also the prerequisite for reliable web comparing tools.
    d. Create public or at least independent EU-wide web-based comparison tools, to enable an objective comparison of all investment products.
    e. Differentiate between inexperienced and experienced investors. MIFID rules led to an overprotectiveness of investors regardless of their experience. Experienced investors should be able to act as semi-professionals and should be able to opt-out of the high protective mechanisms introduced for inexperienced investors.

5. Improve long-term and sustainable value creation

Scientists, governments, companies and investors first need to have a common understanding about which economic activities are deemed sustainable. BETTER FINANCE recommends the following measures:

  • a. Introduce a clear and compulsory taxonomy for “green” products, and progressively widen the taxonomy; not be limited to only “E” (Environment) but also extended to the “S” (Social) and “G” (Governance) criteria.
    b. Adopt a well-designed and controlled ecolabel based on the taxonomy.
    c. Improve the long-term engagement of asset managers (“other people’s money”) with investee companies and introduce a better alignment of asset managers ‘and distributors’ incentives with clients’ long-term returns.
    d. “Green” products must deliver decent returns for long-term and pension savers and a high degree of transparency on how the money invested has been used. In particular, insurers’ Asset /Liabilities Management (ALM) must end its over-reliance on Sovereign debt investing and provide decent real long-term returns (“value for money”) to pension savers, including during the pay-out phase.
    e. Follow up on employee share ownership best practices with a CMU “Action”.

6. Ensure fair and equal access to redress

Creating a more favorable environment for companies to list on EU public markets needs to go in line with strong protection of EU citizens investing in listed companies – not only during the listing but also where companies seek to exit the public markets via a delisting. BETTER FINANCE recommends to:

  • a. Introduce common rules for collective redress for all EU investors: Improve the EC’s “New Deal for Consumers” and the new collective redress mechanism by including direct investors in the proposed collective redress scheme,
    b. Introduce compulsory collective redress schemes comparable to the Dutch system across all Member States.

7. Promote investor education as the key to the success of a real CMU

OECD surveys on financial literacy show that less than 40% of the adult population is able to understand very basic notions such as compound interest or return. BETTER FINANCE recommends the following measures:

  • a. Provide basic financial math and investment education already at school.
    b. Require the distributors of retail investment products to improve the financial education of their staff members, especially with respect to equities, bonds and ETFs, and minimize their conflicts of interests with regard to more indirect, more complex and more commission-laden investment products.
    c. Financial education efforts from the industry should be monitored and supervised by independent bodies.
    d. Introduce an investors’ license as an important tool for investing.

8. Ensure the consistency of all EU financial user protection rules

The various new regulations, e.g. MiFID II, PRIIPs, IDD, Solvency II, IORP II, and rules applicable to banking products (savings accounts, structured notes, etc.) led to inconsistent standards of disclosure which creates confusion among investors and unnecessarily increases the workload for distributors and manufacturers and by that costs for investors. BETTER FINANCE recommends to:

  • a. Eliminate inconsistencies between existing investor and policyholder protection rules (e.g. between MIFID II and PRIIPs, IDD and IBIPs) as well as between various conduct of business rules, in particular on conflicts of interests (“inducements”) and on cross-selling.
    b. Harmonize all pre-contractual key information documents of substitutable investment, insurance and pension products at the points of sale.

9. Sustain the EU support to the involvement of financial services users in EU policymaking

BETTER FINANCE recommends:

  • a. To fairly assess and sustain the EU support – started following the 2008 crisis – to better involve investors and other users of financial services in the EU financial policy-making process.
    b. To ensure that independent experts from User Organizations are adequately represented and compensated at all expert consultative groups of the EU institutions (especially ESAs and Commission).
  • 10. Increase the efficiency of EU institutions’ procedures

    The legislative process of PRIIPs illustrates the difficulties of introducing effective EU regulations and reduces the credibility of the work of the EU Authorities vis-à-vis its citizens. BETTER FINANCE recommends the following steps to increase the efficiency of the work of the EU institutions:

  • a. Enhance supervision of Product Oversight and Governance requirements: The ESAs should be encouraged to fully use their new product intervention powers and sanction any kind of misbehavior by manufacturers and distributors.
    b. Introduce the possibility to give certain EU institutions, such as ESMA or EIOPA, the right to ask for minor corrections of a directive when it becomes clear that there are practical obstacles coming up once a directive is implemented.
    c. Solve fundamental and structural problems during the Level 1 procedure, not postponed to the Level 2 and Level 3 discussions.
    d. The European Commission, Parliament and Council should regularly publish the state of their “Trialogue “negotiations in order to inform the public in a timely manner and prevent any possible unilateral lobbyism by the industry.
    e. Provide for reasonable transition periods for each EU legislative measure.