Date: 24th May 2023

BETTER FINANCE, the European Federation of Investors and Financial Services Users, welcomed the European Commission’s launch of a Retail Investor Strategy in September 2020, as a once in a lifetime opportunity to create a capital markets Union that works for people. Nevertheless, the legislative proposal, despite incorporating certain positive advancements, falls short of fulfilling several of its own key objectives in enabling EU individual investors to benefit from:

  • “bias-free advice”,
  • “coherent rules across legal instruments”,
  • “transparent, comparable and understandable product information”,
  • and “open markets with a variety of competitive and cost-efficient financial services”.

“Bias-free advice”

One of the major disappointments regards the so-called “inducements”, in reality mostly trailing sales commissions paid by providers to distributors of packaged retail investment products. BETTER FINANCE does welcome the proposals to extend the ban on inducements to insurance-based investment products (“IBIPs”), and to ban inducements on “execution-only” (non-advised) sales of investment products, two measures that BETTER FINANCE strongly advocated for. However, this specific and limited ban on “non-advised” sales seems to apply de facto only to the small minority of MiFID-regulated products (essentially investment funds sold directly). Indeed, the Proposal allows Member States to prohibit “non-advised” sales of the much more widely used life insurance and pension products.  Consequently, if the sale of IBIPs without advice is disallowed, it would essentially render the ban on inducements for non-advised sales of IBIPs ineffective.

“Coherent rules across legal instruments”

BETTER FINANCE notes more generally that the proposal crucially fails to adequately tackle the requirement for consistent conflict-of-interest rules across diverse categories of retail savings products. In addition to the aforementioned points, it is worth noting that the proposal fails to extend the prohibition of inducements for portfolio management services under MiFID to portfolio management services for insurance-based investment products (IBIPs) and pension products.

BETTER FINANCE has also been a vocal advocate for this necessary consistency of investor protection rules across various categories of retail investment products. However, the failure to address this issue leaves the conflicts of interest associated with portfolio managers receiving mandates from retail investors for IBIPs unresolved. As a result, there remains a significant opportunity for regulatory arbitrage to the detriment of IBIPs investors.

“Transparent, comparable and understandable product information”

In relation to the Packaged Retail and Insurance-based Investment Products (PRIIPs) Key Information Document (KID), BETTER FINANCE identifies several key unresolved concerns in the proposal.


  • Read the full Press Release below.