EBF COMMENT

EBF comments on the new EU Retail Investment Strategy

BRUSSELS, 24 May 2023 – In keeping with the objectives of the CMU Action Plan, the European Banking Federation (EBF) notes the publication of the EU Retail Investment Strategy as a significant opportunity that, if properly designed, has the potential to increase access to EU capital markets by retail investors while ensuring adequate levels of investor protection. In this context, the EBF has consistently expressed concerns about the possibility of unforeseen disruptions arising from extensive measures, such as a complete prohibition on commissions, and emphasized the potential adverse effects on vital aspects such as the accessibility of comprehensive and high-quality advisory services.

We remain appreciative of the Commission’s decision not to propose a full ban on commissions, recognizing that such a move would have a potential disruptive impact for the European financial sector and for the access to financial advice for European households. However, as we are currently undertaking a comprehensive analysis of the text to understand the full scope and impact of the changes put forward by the Commission, we note that key aspects of the proposals are unprecedentedly far-reaching in nature and give rise to substantial concerns that such a disruptive impact is still likely to materialize, with clear negative impacts that would not be conducive to an improved customer journey or better outcomes for retail investors. We are particularly concerned that the cumulative and combined effect of the totality of measures put forward in today’s proposal, such as a prohibition on commissions in relation to products sold in the execution-only service or new drastic product governance requirements, would produce extensive effects that can limit fair competition between advisory models, resemble regulatory intervention on both price setting and product offering, and even yield outcomes akin to those of a full ban on commissions at least in certain markets.

An EBF spokesperson commented: “The EU Retail Investment Strategy is a unique opportunity to promote access to financial investments by retail clients while ensuring a high level of investor protection. Striking the right balance between simplification, resilience and attractiveness will be key, not last to unlock the long-term funding needed to finance the transition. In order to serve retail clients needs and to ensure that EU capital markets continue to be competitive, it is important that the EU-framework allows retail clients access to different types of investment services (advisory and non-advisory) as well as access to different types of investment products. This is why, at the present state, we are particularly concerned that the combined effect of the far-reaching changes introduced today, while not conducive to a full ban on commissions, may still produce significantly disruptive impacts for the European financial sector. On our part, as the voice of the banking sector, we remain open to supporting the discussion at European level and working with all stakeholders to ensure that the key objectives of the Retail Investment Strategy are fully met.”

For more information:
Ruta Barthet, Senior Media and Communications Officer, r.barthet@ebf.eu

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About the EBF:

The European Banking Federation is the voice of the European banking sector, bringing together national banking associations from across Europe. The EBF is committed to a thriving European economy that is underpinned by a stable, secure and inclusive financial ecosystem, and to a flourishing society where financing is available to fund the dreams of citizens, businesses and innovators everywhere.