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REPORT (COM(2023)0279 – C90182/2023 – 2023/0167(COD))

On the proposal for a directive of the European Parliament and of the Council amending Directives (EU) 2009/65/EC, 2009/138/EC, 2011/61/EU, 2014/65/EU and (EU) 2016/97 as regards the Union retail investor protection rules

A-9-2024-0162

Committee on Economic and Monetary Affairs · Rapporteur: Stéphanie YonCourtin

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Written by a language model from the full text only; every figure comes from the text. The paragraph links open the paragraph a statement rests on — check the text itself before relying on it.

Parliament's amended version of the Commission proposal for a directive amending five EU laws on retail investor protection. It strengthens rules on inducements, product governance, costs and value for money, marketing and finfluencers, advice quality, cross-border supervision and financial education. It bans inducements for portfolio management, requires advisors to recommend the most efficient suitable product, and requires firms to justify and document higher-cost recommendations. It requires manufacturers and distributors to run pricing processes, peer grouping and benchmarks so that costs are justified and proportionate, and lets supervisors require products to be removed from the market. It sets rules for marketing communications and practices, including written agreements with finfluencers, record-keeping, and supervisory powers to suspend or prohibit marketing for up to 1 year. It requires annual statements to retail clients and customers, standardised cost disclosures, and warnings on particularly risky or complex products. It requires Member States to promote financial education, sets minimum training of 15 hours per year for advisors, and requires cross-border activity reporting above 50 clients.

Committee position. The Committee on Economic and Monetary Affairs adopts Parliament's position at first reading, amending the Commission proposal to strengthen retail investor protection rules on inducements, product governance, costs, marketing, advice and financial education.

Key points

  1. Investment firms providing portfolio management must not accept or retain fees, commissions or monetary or non-monetary benefits from third parties.
  2. Minor non-monetary benefits below EUR 100 per annum are excluded if clearly disclosed and unable to impair the duty to act in the client's best interest.
  3. Advisors must inform clients of the range of products assessed, recommend the most efficient suitable product, and justify and record any higher-cost equivalent recommendation.
  4. Advisors must not place the firm's interests ahead of the client's and must refrain from advising if no product is in the client's best interest.
  5. Manufacturers must run a product approval process covering target market, risks, costs and whether costs are justified and proportionate.
  6. Manufacturers and distributors of packaged retail investment products must perform peer grouping analysis, and manufacturers must also analyse historical performance.
  7. ESMA and EIOPA must develop common European benchmarks for products sold in more than one Member State; national authorities develop benchmarks for single-market products.
  8. If a product deviates from a benchmark and the firm cannot justify it or correct its approach, supervisors may require the product to be removed from the market.
  9. Marketing communications must be identifiable, fair, clear, not misleading and balanced; firms must keep records and report annually to their management body.
  10. Firms using finfluencers must have a written agreement, provide their identity to supervisors on request, and regularly verify their compliance.
  11. Investment firms must provide annual statements to retail clients with costs, charges, third-party payments, dividends, interest, taxes and portfolio performance.
  12. Member States must promote financial education, and advisors must undertake at least 15 hours of professional training per year, including on sustainability.

Who is affected

  • Investment firms and credit institutions providing investment services to retail clients, which must follow new advice, cost, marketing and reporting rules.
  • Insurance undertakings and insurance intermediaries distributing insurance-based investment products, which face similar product governance, advice and disclosure rules.
  • UCITS and AIF management companies, which must prevent undue costs, reimburse investors and report on costs and performance.
  • Finfluencers promoting financial products, who may be subject to supervisory measures if they promote unauthorised firms.
  • Member States, which must transpose the rules, promote financial education and report on implementation.

Figures and deadlines

  • EUR 100 per annum: threshold below which minor non-monetary benefits are excluded from the inducement rules.
  • 30 working days: maximum time for firms to reply to client complaints.
  • 40 working days: maximum time for insurance distributors to reply to complaints.
  • 50 clients: threshold above which cross-border activity reporting applies.
  • 15 hours per year: minimum professional training and development for advisors.
  • EUR 1 564 610 per claim and EUR 2 315 610 per year: minimum professional indemnity insurance for insurance intermediaries.
  • 4 % of annual premiums, minimum EUR 18 750: financial capacity requirement for insurance intermediaries.
  • 1 year: maximum duration for which supervisors may suspend or prohibit marketing communications or practices.

Legal basis: Article 294(2) and Article 114 of the Treaty on the Functioning of the European Union.