At the EACB, co-operative banks have analysed the Retail Investment Strategy (RIS) and have concluded that the Commission’s proposed changes to the existing legislation are inappropriate to achieve the strategy’s goals in favour of retail investors. This is mainly because we see that the justifications behind the proposals are not being backed up by adequate sources of evidence, as well as, the disappointing fact that the strategy ignores the diversity and the co-existence of banking models which allow all retail investors to find an investment solution whatever their needs, financial profiles and objectives.
We also believe that policymakers cannot assess the RIS without taking into account the regulatory tsunami that the retail banking industry is currently navigating in the areas of digitalization and payments (eID, Digital Euro, FIDA, PSD II), while also considering its capital and liquidity obligations under the current implementation of the Basel IV reform; and the urgent actions being undertaken towards the transition to a green and sustainable economy.
This is threatening to impact the business model of retail banks, particularly cooperative banks highly engaged in the provision of services to households and SMEs. It will also inevitably impact how customers receive services from banks and will influence client needs and expectations. We fear that this tsunami will lead to not more than a trickle of benefits for customers, while at the same time it will massively intervene in the business models and the market. The EACB thus would like to highlight seven (7) key messages with respect to the Retail investment strategy.
- Maintain remuneration for the provision of portfolio management in the value chain of distribution networks & cooperative banking groups
- Allow for inducements for non-advised and execution-only sales
- Abandon the new requirements on “the best interest test” of the client
- Abandon the new cost and performance benchmarking approach when establishing the value of a product
- Abandon the new requirements for the suitability and appropriateness assessments
- Ensure adequate timing of implementation and reduce mandate to establish important criteria under Level 2 and 3 regulation
- Limit the effects of the proposal on professional markets
To learn more about our key messages, please read our detailed position paper.