June 29, 2018

The EC Vice President Valdis Dombrovskis gave an opening speech, in Brussels, at the public hearing on ways to make the Capital Markets Union (CMU) work for retail investors. He outlined the initiatives that are coming into application this year, addressed some of the ongoing actions to increase options for retail investors, and covered what will be done next.

He first outlined the ongoing and completed work in the areas of directive on undertakings for collective investment in transferable securities (UCITS), packaged retail investment and insurance-based products (PRIIPs), and the second Markets in Financial Instruments Directive (MiFID II), before finally discussing the future actions of EC. EC will monitor the effectiveness of the new regulatory framework for retail investments and whether it meets the goals of investor protection. As a first step in this effort, EC recently published an external study on the distribution of retail investment products in the EU. The study shows the difficulties end-investors face when trying to buy the most suitable investment fund, life insurance or private pension.  The study also showed that there is a wide variation in the fees that Europeans get charged when investing in retail financial products. The data for this report was collected in 2017, before the entry into application of MiFID II, the PRIIPS Regulation, and the insurance distribution directive. This is why it will be used as a baseline for monitoring how the new regulatory framework is working.

EC is also taking additional actions to help retail investors find the best offers available on the market. That is why EC requested ESAs to report on a recurrent basis on the cost and past performance of the main categories of retail investment, insurance, and pension products. The first report is expected by the end of the year. It should provide information to help identify issues where further action is required. The results are also expected to make retail investors more aware of the impact of diverse fees and charges on net returns. Additionally, EC wants to look at how fintech can help in achieving goals. It is worth asking whether digital technology, such as artificial intelligence, big data analytics, or block chain, can help consumers find the information they need. Such tools could be based on publicly available disclosures and provide a user-friendly interface linking existing databases. To find out more, EC will soon examine the current landscape of technology-driven digital interfaces and their potential to facilitate retail investment. The EC Vice President concluded that work needs to continue to give retail investors the confidence they need to invest in capital markets. He hopes that EC to hear suggestions for further work to help EC to develop retail financial markets.

 

Related Link: Speech

Keywords: Europe, EU, Banking, Insurance, Securities, Investor Protection, Capital Markets Union, MiFID II, PRIIPs, Fintech, EC

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