In a speech at the DG FISMA Roundtable on the distribution of retail investment products, Commissioner McGuinness highlighted the challenges faced by the European retail investment market and outlined the European Commission’s approach to tackle them. The Commissioner stressed the importance of supporting retail investment in Europe and expressed the shared objective among stakeholders, despite differing opinions on how to achieve it.
The European retail investment market has not fully realized its potential, with a lack of a vibrant investment culture compared to other advanced economies. The majority of Europeans do not invest, which has significant implications for their future personal finances, particularly in retirement. The Eurobarometer indicates that most Europeans are not confident about having enough money to live comfortably during their retirement years.
Several factors contribute to this situation. Limited understanding of the financial system, low trust in financial advisers, and expensive retail investment products discourage individuals from investing. Many EU citizens opt for alternative investment options or leave their money in low-yielding savings accounts.
However, Commissioner McGuinness also highlighted the positive impact of technology on retail investment. New banking apps and investment platforms have made investing more accessible and affordable, especially for young people. Nonetheless, safeguards and investor education are crucial to mitigate the associated risks.
To address these challenges, the European Commission has introduced the Retail Investment Strategy, which focuses on areas such as disclosures and information, value for money, common standards for financial advisors, and action against misleading marketing. The proposal also includes measures related to inducements, with a ban proposed for cases where no advice is provided. The Commission aims to review the situation in three years.
While regulatory and supervisory measures play a significant role, Commissioner McGuinness emphasized the financial sector’s power to take positive action. The roundtable provided an opportunity for stakeholders to reflect on how they can improve the situation for retail investors and contribute to creating a more attractive and understandable environment. The Commissioner encouraged stakeholders to rethink certain practices, explore non-legislative actions, and work towards consensus on key questions, such as the future of financial advice, increasing retail investor participation in EU capital markets, and leveraging technology for consumer benefit.
The European Banking Federation, EFAMA, and Insurance Europe will lead the process, and stakeholders are expected to deliver outcomes such as a report, a set of best practices, or industry-wide commitments. Another roundtable is planned in six months to assess progress.
Commissioner McGuinness concluded by expressing her appreciation for the stakeholders’ presence and constructive approach, emphasizing the need for change in the status quo of retail investment to better serve consumers’ interests.
https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_23_3923