Ill Council of the EU today an agreement was reached on the regulation package of retail investments (Retail investment package), which aims to strengthen EU rules protection of retail investors.
The regulatory package has a purpose support individual consumers who want to invest in EU capital markets, better protect their investmentsproviding them more specific information on investment products and providing greater transparency and disclosure.
May 24, 2023 The European Commission introduced a regulatory proposal for retail investments as part of measures to introduce and complete the Capital Markets Union (CMU). single capital market.
Ill Retail investment package includes, in particular, two legislative proposals.
- a recommended instruction omnibus Amendment of Directive on Markets in Financial Instruments (MIFID:)Insurance Distribution Directive (IDD:), Solvency IIThe directive “On making collective investments in transferable securities” (UCITS:) and Alternative Investment Fund Managers Directive (AIFMD:)
- a recommended setting which modifies PRIIP regulations: (Packaged retail and insurance-based investment products)
A package has a purpose set the same transparency and information requirements in all EU legislationto avoid overlaps.
This includes, among other things,customizing disclosure rules; that ensure that investment products offer real added value to retail investorsis resolution of potential conflicts of interest thanks to the encouragement fight against misleading marketingholding up qualification standards of specialists and strengthening of cooperation in supervisory matters to ensure the correct application of the rules across the EU.
With today’s agreement, the board is therefore ready start negotiations with the European Parliament on the final text of the regulatory acts.
In his position retail investment packageIn particular, the Council has formulated new provisions concerning incentives e di cd: value for money with the obligation to review them after five and seven years, respectively, from their entry into force.
Incentives (so-called motivation)
The council, summarizing.
- Yes The ban on “incentives” has been lifted (often called “commissions” or “transfer fees”) for the amount received performance sale only (where the investor is not advised), valid for independent investment advice and portfolio management, with limited exceptions.
- in order to strengthen prevention of potential conflicts of intereststrengthened guarantees which accompany all incentives:
- and: motivation testing which applies in cases where there is no incentive prohibition
- a new one a unified test that specifies the responsibilities of counselors to act in the best interest of the client
- bigger transparency and disclosure considered fees incentivestheir costs and their impact on return on investment.
- has further enhanced defenses presenting “general principles“Respect when paying or receiving incentives.
- these principles are not part of the incentives test as such, but companies should always respect them when paying or receiving incentives by third parties and be able to demonstrate this to competent national authorities;
- incentives they should not encourage companies to offer certain products over othersshould not be disproportionate to the value offered, and incentives paid or received and maintained by individuals belonging to the same group should be treated in the same way as others.
Value for money
The advice in this context.
- introduced a new the concept of “quality/price ratio”. to ensure that i investment products are only offered to retail customers if they offer good value for money; Under the new rules, manufacturers and distributors must assess whether the costs and fees associated with a product are justified and proportionate to its performance, other benefits and features, objectives and, if applicable, strategy.
- provided that the European supervisory authorities, ESMA and EIOPA, they will evolve Union control parametersHowever, rather than mandatory parameters integrated into the product management process of issuers and distributors, they will be a supervisory tool designed to help competent national authorities identify investment products that do not represent good value for money.
- since benchmarks used as control tools would not be directly binding on issuers and distributors, the Board agreed; strengthen their product management process with a peer group system, or others similar investment products in the EUwith whom Issuers and distributors should compare their investment products to determine whether an investment product offers good value for money; The comparison will be based on the information contained in the databases managed by ESMA and EIOPA
- he predicted that Member States will be able to predict possibility for issuers and distributors of financial products choosefor the purpose of market comparison in quality-price ratio assessment processes, compare their products with the relevant Union control benchmarkrather than with a peer group
- he predicted that Member States whose national competent authorities have been developeduntil July 1, 2024, national benchmarks on cost and performance to notice the outliers, they will be able to decide to continue using these national settings, but only in relation to insurance investment products.