EFAMA has welcomed the EU’s decision to move away from banning commissions on execution-only transactions, forming part of EU member states decision statement yesterday (12 June) confirming their position on the Retail Investment Strategy after months of intensive negotiations under the Belgian Council Presidency.
The stance on commissions, though ensuring that retail investors will have access to direct distribution channels such as fund platforms, does leave “much that still needs to be discussed and clarified”, the European investment management industry trade body said.
“There are currently a variety of tests envisioned, including inducement, quality enhancement, best interest, and suitability and appropriateness tests. It is important that these tests work together effectively and do not create additional investment barriers”, the statement said.
“When it comes to value-for-money proposals, there are also lingering concerns about how the European supervisory benchmarks would interact with peer group assessments conducted by companies. The value-for-money framework must ensure that the data used for the supervisory benchmarks comes from the data used to conduct peer group assessments. As things stand, the risk is high that we end up with a complex, costly, and ineffective value-for-money framework.”
Once the new European Parliament is fully constituted, the Retail Investment Strategy will be discussed further by both bodies to reach a final agreement.
Kimon Argyropoulos, regulatory policy advisor at EFAMA, said: “The forthcoming trialogue discussions present EU policymakers with an opportunity to refine the Retail Investment Strategy and avoid unnecessary complexity.
“For example, having two separate systems each trying to define value-for-money would be a recipe for failure. Policymakers need to create a framework that is both effective and practical, minimizing burdens for the industry while maximizing benefits for retail investors.”
