BETTER FINANCE welcomes the initiative of the European Commission to harmonise and improve the consumer journey towards investing.
The European Commission proposes to replace the current
suitability-appropriateness duality in the MiFID II and insurance
distribution Directives, with a new, unique, and standardised
suitability regime for all categories of retail investment products,
including “IBIPs” (insurance-based investment products).
BETTER
FINANCE previously voiced its concerns regarding the detrimental effects
of the suitability-appropriateness test duality, pointing to the fact
that the appropriateness regime brings little added value for retail
investor protection.
BETTER FINANCE sees benefits in harmonising the suitability
questionnaire and providing standard investor profiles, under certain
conditions: first, to adequately define and differentiate the
risk-return trade-off, which proved inadequate for long-term investment
products; second, the rules behind the standardised asset allocation and
the investor profiles must allow for the independent advisor to
accommodate for a wider variety of risk profiles, investment horizons,
and objectives.
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