BETTER FINANCE response to the European Commission’s Public Consultation on the EU Strategy for Retail Investors

BETTER FINANCE welcomes this consultation from the EC on a much-awaited and needed strategy for retail investors, and fully supports its clearly stated objectives, as defined in the EC CMU Action Plan and in the web consultation itself:

1. adequate protection,
2. bias-free advice and fair treatment,
3. open markets with a variety of competitive and cost-efficient financial services and products, and
4. transparent, comparable and understandable product information.

The consultation webpage also rightly adds:

• ensure that a legal framework for retail investments is suitably adapted to the profile and needs of consumers,
• helps ensure improved market outcomes, (although it is difficult to identify questions related directly to these key issues except on value for money),
• empowers retail investors
• and enhances their participation in the capital markets.

In BETTER FINANCE’s view, the current retail investor protection framework falls short of achieving its purpose for the following reasons:

• Very little access to bias-free investment services, resulting in little access to investment products that are closest to capital markets and to the real economy such as low-cost index ETFs, listed equities and bonds;
• Different standards of investor protection across sectors / product categories;
• Inadequate key disclosures;
• Extreme difficulty to obtain redress for individual investors;
• Inadequate client categorization;
• Inadequate rules on product oversight and governance;
• Insufficient safeguards for sustainable finance;
• Under-developed employee share ownership;
• Need for an EU-wide cross-sectoral conduct of business supervision (“Twin Peaks”)

• Read the full text below.
• Read Annex 1 here.
• Read Annex 2 here.

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