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

03 August 2021

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

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.

Better Finance

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