RegSol Blog

European Commission: Retail Investment Strategy

November 2023

The European Commission (“EC”) has published its Retail Investment Strategy, which aims to empower retail investors to make investment decisions that are aligned with their needs and preferences, ensuring that they are treated fairly and duly protected. The strategy amends the UCITS Directive and the Alternative Investment Funds Managers Directive (“AIFMD”).

The other measures include:

  • New rules aimed at protecting retail investors from misleading marketing communications and practices which emphasise benefits but downplay any potential risks
  • Rules from prohibiting inducements in execution-only cases, strengthening of the best interest principle, new criteria for “acting in the best interests of the client” and improving transparency; and
  • Further measure on financial literacy, investor categorisation, enhanced suitability and appropriateness assessments and measures to increase professional qualifications of financial advisors.

The EC has also proposed to amend the regulation on Packaged Retail and Insurance-Based Investment Products – the PRIIPs Regulation. It will introduce a new section in the PRIIPs key information document (“KID”) titled “product at a glance” to summarise and highlight information on product type, costs, level of risk, recommended holding period and presence of insurance benefit as well as a dedicated section focused on sustainability.

The European Commission invited stakeholders and interested parties to submit their feedback on the proposals until 28 August 2023. The European Commission’s proposals will now need to go through the legislative process with the European Parliament and the Council of the European Union before approval.

More information on the Retail Investment Strategy can be found here.