On 6 June, EACB, in conjunction with other finance industry representatives including the European Banking Federation (EBF), the European Savings and Retail Banking Group (ESBG), the European Fund and Asset Management Association (EFAMA), Insurance Europe, the Association of Mutual Insurers and Insurance Cooperatives in Europe (AMICE), the European Association of Public Banks (EAPB) and the European Structured Investment Products Association (EUSIPA), issued a joint statement addressing the new Retail Investment Strategy (RIS) published 24 May by the European Commission (EC).
EACB together with the co-signatories expressed support for the shift towards ‘digital-by-default’ communication, the streamlining of disclosures and the efforts to further promote financial literacy in the proposed strategy. However, there are a number of salient issues that we called for policy-makers to consider.
We expressed our concerns with regards to the large number of prohibitions in the payment of commissions in investment product distribution as stipulated in the RIS proposal, which stand to hinder access to investment and cause potential disruption to the market. Likewise, the high volume of requirements put forward would add unnecessary complexity to the investment process, further burdening investors from participating in the capital market.
In addition, we are wary of the newly proposed approaches of the ‘best interest of the client’ test and the ‘value for money’ benchmarks with a disproportionate weight on costs over other intangible values. Regarding the latter, we sought to underscore in our joint statement that cost and performance benchmarks directly contradict the core goal in the investment process of offering tailored solutions to clients, and more generally, are a form of price interventionism that could dampen competition and innovation.
Against these considerations, we expressly disagree with the envisaged timeline of the strategy’s implementation, which at the moment proves impossible for the industry to comply with before all the Level 2 and national provisions are published.
Finally, we advised that we shall remain open to further discuss the measures with the EU institutions after we have completed our full assessment of all the legislative texts.