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Retail Investment Package - guide

24 May 2023
by eub2 -- last modified 24 May 2023

The European Commission adopted on 24 May a Retail Investment Package that it says places consumers' interests at the centre of retail investing.


What does the Retail Investment Package aim to achieve?

As announced in the 2020 Capital Markets Union Action Plan, the Commission's objective is to make the EU an even safer place for people to invest their savings in the long term.

Today's package aims to improve the framework so that consumers are empowered to make retail investment decisions that meet their needs and preferences and to ensure that they are treated fairly and duly protected. The proposed measures aim to enhance retail investor's trust in capital markets and help them achieve better outcomes with their investments, so that they can prepare for their future, such as their retirement. In turn, increasing trust in the capital markets will be essential to make a success of the Capital Markets Union and encourage retail investor participation in the medium term.

Investor protection rules are set out across sector specific regulation, including the Markets in Financial Instruments Directive (MiFID II), the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation, the Undertaking for Collective Investment in Transferable Securities (UCITS) Directive, the Alternative Investment Fund Managers directive (AIFMD), the Insurance Distribution Directive (IDD), and the taking-up and pursuit of the business of Insurance and Reinsurance Directive (Solvency II). Applicable rules can differ from one financial instrument to another and may sometimes be inconsistent, making the cumulative requirements confusing for retail investors. The safeguards that the framework contains may also not be fully effective in protecting retail investors and ensuring they are treated fairly. At the same time, digitalisation is changing the distribution landscape and has brought new forms of marketing aimed at retail investors.

Today's package aims at streamlining and modernising these rules, to place consumers' interests at the centre of retail investing and ensure that retail investors receive the same treatment and protection regardless of which investment products, marketing and distribution channels they choose. Against the backdrop of an ageing EU population and longer life expectancy, long-term investments in capital markets could help people achieve higher and more sustainable returns and a complementary income for their retirement, while at the same time increasing the amount of long-term orientated capital that can be channelled into the economy.

What is the problem with retail participation in capital markets in the EU?

The level of retail participation in EU capital markets remains low compared with other advanced economies. In 2021, approximately 17% of EU household assets were held in financial securities (listed shares, bonds, mutual funds and financial derivatives), well below the amounts held by US households.

A large share of EU households' financial wealth is held as bank deposits offering negligible return. At the same time, long-term investments in stock markets have delivered substantial gains in the past. That suggests that a large proportion of consumers may have missed out on the opportunity to benefit from capital market investment returns.

One of the reasons explaining this trend is that European retail investors' trust in capital markets is low. The consumer markets scoreboard has generally ranked investment services among the services that consumers trust the least. Specifically on investment advice, according to a recent Eurobarometer survey [1], 45% of consumers are not confident that the advice they receive from financial intermediaries is primarily in their best interest. Other factors contributing to a low level of participation in capital markets are the lack of financial means [2], concerns about the risks, uncertainty about the potential returns, complexity, and a preference to invest their money elsewhere (such as in cryptocurrencies) [3].

Finally, if they do invest, retail investors may not always get the best deal: products and services offered to retail investors often carry high fees and commissions which have a negative impact on their return on investments. For example, in 2021, retail clients were charged on average around 40% more than institutional investors across asset classes [4].

Retail investors are heavily dependent on advised services, and retail investment products [5] in the EU are predominantly distributed through a commissions-based model, where distributors receive commissions from product manufacturers for the products they recommend and sell to retail investors. The existing rules do not sufficiently mitigate the potential conflicts of interest which can arise in this distribution model, and which may lead to the sale of more expensive products that deliver suboptimal outcomes for retail investors.

The risk of suboptimal outcomes for retail investors is exacerbated by the current economic environment and the significant shift from a low interest rate environment towards high inflation and rising interest rates. The increasing cost of living and erosion of savings means that it is even more important that returns on retail investments are not eroded by high fees and that the legal framework is effective in facilitating an efficient market that delivers better investment outcomes.

[1] Eurobarometer survey monitoring the level of financial literacy in the EU, 2023. The relevant question is Q12: "How confident are you that investment advice you receive from your bank/insurer/financial advisor is primarily in your best interest?".

[2] Eurobarometer survey on Retail Financial Services and Products, October 2022. According to the survey, around half of the respondents consider that they did not have sufficient means to invest.

[3] Eurobarometer survey on Retail Financial Services and Products, October 2022.

[4] ESMA, Performance and Costs of EU Retail Investment Products, 2022, page 6.

[5] See page 26 of the 2018 Report on the Distribution systems of retail investment products across the European Union.

What are the main problems with the current legislative framework?

The Commission has identified a number of problems along the retail investor journey that hinder their ability to take full advantage of capital markets:

  • Retail investors have difficulties accessing relevant, comparable and easily understandable investment product information to help them make informed investment choices;
  • Retail investors are exposed to a growing risk of being influenced by misleading marketing on social media and via new marketing channels;
  • There are shortcomings in the way products are designed and distributed, linked to potential conflicts of interest that may arise as a result of the payment of inducements from product manufacturers to distributors; and
  • Some investment products have unjustifiably high costs that consequently do not always offer value for money to the retail investor.

There is a need to increase the levels of financial literacy so that retail investors are empowered to make the right investment decisions for their situation.

How does today's package address these problems?

The package introduces targeted changes to disclosure rules aimed at improving transparency for retail investors, while adapting these rules to the digital age. It also introduces specific safeguards to address deficiencies relating to marketing communications. These targeted changes concern both individual disclosures to retail investors before and after they make an investment decision and the general product information presented in the PRIIPs Key Information Document (KID).   

Today's package addresses these problems in a variety of different ways:

1. Individual information to retail investors

What are the main changes in a nutshell?

The changes centre on the following improvements:

  • modernising disclosures so that they are fit for digital distribution;
  • modernising and standardising cost disclosures to ensure that they are truly transparent to retail investors, both in terms of understanding the costs - including any payments of inducements to an intermediary - and their impact on the investment return;
  • introducing annual statements that set out clearly the costs and investment performance;
  • introducing mandatory risk warnings to help retail investors avoid taking risks that are not suitable for them.

In addition, specifically for insurance-based investment products and insurance products more generally, the disclosure rules in Solvency 2 and the Insurance Distribution Directive (IDD) have been modernised, streamlined and duplications eliminated to improve their usefulness for retail investors and to cut red tape for providers.

What are the specific changes to disclosure requirements for insurance-based products and other insurance contracts about?

Retail investors and customers for insurance products must be able to make an informed choice between the insurance products and insurance-based investment products available to them in the market. For this purpose, the package modernises and simplifies the rules on disclosures. It introduces a new Insurance Product Information Document for life insurance policies without investment elements. This standardised and user-friendly document will complement the already existing Insurance Product Information Document for non-life products and the PRIIPs Key Information Document for insurance-based investment products.

2. Changes to general product disclosure rules

What are the main changes to the Packaged retail and insurance-based investment products (PRIIPs) Regulation?

The Key Information Document (KID) is a document retail investors receive when they purchase certain investment products. It summarises and explains the key elements of each investment product – especially the costs, risks, and potential returns – so that private investors can better understand the product they are buying and compare it with other products. The package makes several changes to the PRIIPs Key Information documents in order to make them more suitable to the evolving needs of investors and use on digital devices (such as smartphones and tablets) and increase legal clarity:

    • Introduction of a summary dashboard, to make key information on costs and risks of investment products highly visible at the top of the document.
    • More flexibility to display information from PRIIPs key information documents in a digital and user-friendly way, notably by allowing the use of layering, i.e. the possibility to click on the titles of different sections of the key information document and expand the text of the sections of interest, which complements the fixed document, such as in PDF format, that exists today. The package also specifies conditions for more interactive features. 
    • A new sustainability section in the Key Information Document to make information on sustainability-related characteristics of investment products more visible, comparable and understandable for retail investors. This section will build entirely on existing sustainability disclosures, avoiding any new reporting burdens.
    • Adapted rules for presentation of key information on multi-option products (MOPs), ensuring better visibility on total costs of such products while allowing some degree of flexibility.
    • Clarifications to provide greater legal clarity on the exclusion of specific products (e.g. corporate bonds) that were not originally intended to be captured by the PRIIPs regulation.

3. Measures to improve "value for money" for retail investors

What does "Value for Money" mean, why is it needed and for what products does it apply?

Evidence shows that there are some products on the market that provide little, if any, value for money to the retail client, in particular due to high costs of products. EIOPA and ESMA have been working to address these issues.

Today's package builds on previous work by EIOPA and ESMA and strengthens existing product governance rules, including rules on pricing processes for packaged retail and insurance-based investment products (PRIIPs) in MiFID and the Insurance Distribution Directive (IDD) to ensure that products that are offered to retail clients offer good value for money for retail investors.

Similarly, the pricing process for UCITS ("Undertaking for Collective Investment in Transferable Securities") management companies and Alternative Investment Funds Managers, will be strengthened by introducing similar value for money rules, as well as clarifying what costs are due, in the UCITS Directive and the Alternative Investment Fund Managers Directive (AIFMD) respectively.

Rules on value for money are applicable to UCITS, but also to AIFs that are marketed to retail investors.

How will the principle of "Value for Money" be implemented?

MiFID and the Insurance Distribution Directive (IDD) already have product governance rules which ensure that financial products are only manufactured and/or distributed when they provide value for money. These existing rules will be complemented by new requirements on manufacturers to set out a 'pricing process' allowing for the identification and quantification of all product costs and charges, and the assessment of whether such costs and charges do not undermine the value which is expected to be brought by the product.

Similar assessments should be conducted by distributors, who should – building on the assessment of the manufacturers – take into consideration overall costs incurred by retail investors when purchasing a product. If a manufacturer or distributor assesses that the product will not deliver value for retail investors, they should not approve the product to be distributed. To make the assessment more objective, manufacturers and distributors should additionally compare the product with a relevant benchmark, if developed by ESMA or EIOPA, on the basis of supervisory data. The above process should be verified by national competent authorities.

For the UCITS Directive and AIFMD, the same objective is achieved by introducing similar value for money rules into the existing pricing process, as well as defining the conditions for considering what costs are due (i.e. considered legitimate) and provide rules in the pricing process to ensure that these conditions are met. 

What benchmarks are used when assessing when costs are justified and proportionate? How will the "Value for Money" assessment against benchmarks work?

The package gives a mandate to ESMA and EIOPA to develop, make publicly available, and regularly update cost and performance benchmarks against which the manufacturers and distributors must compare their products prior to offering them on the market. To facilitate the development of benchmarks, reporting obligations for manufacturers, distributors and national competent authorities towards ESMA and EIOPA are introduced, in MIFID, the IDD, the UCITS Directive and AIFMD, building on existing reporting obligations and keeping any new ones limited to what is strictly necessary. 

Benchmarks are a comparison tool to help make the pricing process more objective – at both manufacturing and distribution levels. A deviation from the relevant benchmark should introduce a presumption that costs and charges are too high, and that the product will not deliver Value for Money, unless the manufacturer or distributor is able to demonstrate otherwise. The comparison should be undertaken during the pricing process where a benchmark is available. The fact that the benchmark, which would be considered relevant for the product, is not available is not a circumstance alleviating the manufacturer or distributor from the obligation to demonstrate that costs and charges are justified and proportionate.

To whom do the Value for Money" requirements apply? What are the role and obligations of distributors?

The requirements apply to both manufacturers and distributors of retail investment products. They must clearly identify all costs and charges of the product and assess them against the characteristics of the product and the expected return, to ensure that the product offers retail investors good value for money.

Distributors are also under an obligation to identify and quantify any costs that have not already been taken into account by the manufacturer and to assess whether they are justified and proportionate to the needs and objectives of their clients.

To ensure that all costs are covered in the benchmarks, distributors (i.e. investment firms, insurance undertakings and insurance intermediaries) must report the costs of distribution of packaged retail and insurance-based investment products, including details on the cost of advice and inducements, to national competent authorities. Such data should be shared with ESMA or EIOPA to enable them to develop benchmarks.

In case of an investment firm distributing products designed by a manufacturer who is not covered by similar reporting obligations, an investment firm should also report data on costs and charges related to the product to the national competent authority.

In the case of insurance-based investment products, reporting obligations towards national competent authorities and EIOPA are centralised at the level of the manufacturer as insurance undertakings typically have full control over the costs charged to the customer, including distribution costs. Distributors of insurance-based investment products are also required to check, as part of their pricing process, whether there are any costs at the distribution level that are not taken into account in the pricing process of the manufacturer. If this is the case, they must inform the manufacturer immediately so that the costs can be included in the centralised pricing and reporting process at the manufacturer's level.

What are the new rules on undue costs for products covered by the UCITS Directive and AIFMD?

The UCITS Directive and AIFMD include new provisions to ensure that costs are not undue. The provisions on undue costs are currently included in Level 2 of the UCITS Directive and the AIFMD, and in ESMA's Level 3 provisions. ESMA has highlighted the lack of convergence in the area of undue costs due to the lack of a clear definition and clear empowerment at Level 1 for Level 2 work [6]. Therefore, the UCITS Directive and AIFMD will define the conditions for considering that costs are due and provide rules in the pricing process to ensure that these conditions are met.

 [6] ESMA opinion on undue costs of UCITS and AIFs, 2023.

4. Measures to address conflicts of interests - Inducements

What are inducements and why are they problematic?

Inducements are any kind of payment or non-monetary benefit (often referred to as commissions) paid or provided by anybody other than the retail investor to the distributor of an investment product. Inducements may cause conflicts of interest in the distribution of retail investment products, as they may influence the distributor's advice for a certain product. This may steer retail investors towards more costly or less performant investment products, impairing the efficiency of the retail investment market. Evidence shows that this has a considerable impact on retail investors' net return on investment.

How does the package address this problem?

The package is based on a staged approach. While it does not provide for a full ban on inducements, it introduces a set of restrictions and safeguards in relation to inducements, together with increased transparency requirements, as well as safeguards relating to advice, by:

  • Banning inducements for sales of investment products where no advice is provided.
  • For sales where advice is provided, replacing the current criteria with a new uniform test specifying the duty for advisors to act in the best interest of the client.
  • Where inducements are permitted, requiring distributors to inform clients about what inducements are, as well as their costs and impact on investment returns.

The proposed changes are introduced in a uniform way in both MIFID and IDD to ensure a level playing field and the same level of retail investor protection for all investment products and services.

As a second stage, three years after the adoption of the package, the Commission will assess the effects of inducements and the impact of the newly introduced rules, and may, in case of continued consumer detriment, adopt strengthened rules in line with Better Regulation rules.

What is the definition of advice?

The concept of "advice" is clearly defined in existing legislation. "Advice" is understood as the provision of a personal recommendation to retail investors. This means that the intermediary makes a personalised assessment of the retail investor's needs and of investment products that match those needs. Non-advised (or execution only) sales is the intermediation of investment products without such a personalised recommendation.    

What is the ban on inducements for non-advised sales?

The package introduces a ban for non-advised sales. This means that a distributor should not accept inducements if a retail client buys an investment product without receiving advice from the distributor. By way of example, when a retail investor contacts the bank and makes an investment after receiving a personal recommendation, inducements are allowed. If the retail investor instead makes an investment via the bank's web page and selects a product without any prior personal recommendation, then the payment of inducements is not allowed.   

Minor non-monetary benefits not exceeding EUR 100 per annum or of a scale and nature such that they could not be judged to impair compliance with the duty to act in the best interest of the retail investor are allowed for non-advised sales to the extent that they are clearly disclosed.

The ban on inducements in relation to execution-only services is not applicable to situations where investment firms provide advice to the same client relating to one (or more) transactions covered by the same advice. It also does not apply in relation to fees or remuneration received or paid from an issuer for placement and underwriting services.

The existing ban on inducements on portfolio management and independent advice remain in place.

Under what circumstances are inducements allowed where advice is provided?

While both MiFID and IDD already contain rules intended to mitigate potential conflicts of interest, the package introduces stricter safeguards for advised sales, in particular a strengthened test to ensure that distributors act honestly, fairly and professionally in accordance with the best interest of their clients as well as strengthened transparency requirements.

When can "independent" insurance intermediaries providing advice to retail customers still receive inducements?

Specifically in relation to IDD, the package strengthens the safeguards for advisors that choose to provide advice on an independent basis. In line with existing MiFID rules, advisors that present their advice as being provided on an independent basis need to offer a sufficiently broad range of products and may not accept inducements.

This proposed rule does not prevent insurance intermediaries offering advice to customers from accepting inducements, provided that the advice is not presented as independent, customers are informed of the inducements in line with applicable transparency requirements and that other legal requirements, including the requirement to act in the best interest of the customer, are complied with.

How does the proposal address issues with the quality of advice?

The package introduces safeguards to improve the quality of advice generally, whether or not inducements are paid. It does so by further substantiating the obligation for all investment firms, insurance undertakings and insurance intermediaries to act in the best interest of their clients and customer, by:

  • Basing their advice on an assessment of an appropriate range of investment products,
  • Recommending the most cost-efficient financial product from the range of suitable financial products, and
  • Offering at least one financial product without additional features which are not necessary to the achievement of the client's investment objectives and that give rise to additional costs.

In addition, insurance undertakings and insurance intermediaries distributing insurance-based investment products must ensure that the insurance cover included in the product is consistent with the customer's insurance demands and needs.

The above safeguards to manage conflict of interests replace the existing safeguards that allow for the payment or receipt of inducements to the extent that they enhance the quality of the service under MiFID or do not have a detrimental effect under IDD.

What does "appropriate range" of investment products mean?

In order to act in the best interest of the client, advisors need to offer an appropriate range of products. The aim is to ensure that intermediaries look at a sufficiently broad range so as to meet the retail investor's needs and objectives. The appropriate range of products can also be met by tied agents, if the advice on an appropriate range of products is ensured through products from one manufacturer. In such a case, clients need to be informed in line with applicable requirements.       

5. Measures to ensure better investment decision making – assessing appropriateness and suitability of products and providing advice

What problems did you identify with the appropriateness and suitability of products? 

The suitability and appropriateness assessments need to be made respectively before an advisor recommends a specific product to a client and before a broker executes a client's order on a complex product. The appropriateness assessment is only required for execution-only transactions of complex products and should in practice be a quick, automated process at a minimal cost for firms.

Which test applies to retail clients?

Appropriateness test

(execution services)

(Based on client's knowledge and experience, ability to bear losses and risk tolerance)

Suitability test

(advised services)

(based on client's knowledge and experience, financial situation, ability to bear losses, investment objectives, risks tolerance and portfolio diversification)

Simple products

No test at all


Complex products



The application of these assessments, which ensure either the suitability or the appropriateness of the considered investments, varies greatly in the EU and often shows deficiencies, including in relation to the timing, quality, scope and depth of investor screening and associated results. In such cases retail investors may purchase products which may not meet their needs and objectives or their financial capacities.

How does the package address these issues?

The package clarifies and, where relevant, strengthens the requirements that distributors need to comply with when assessing the suitability of a recommendation or the appropriateness of a financial product for the retail investor:

  • The suitability and appropriateness assessments will need to be conducted in good time before the provision of the relevant investment service or before the customer is bound by an insurance contract or offer.
  • A suitability assessment report will need to be provided to clients/customers sufficiently in advance before the conclusion of the transaction to enable clients to seek and get additional clarifications, where needed.
  • When providing advice, the advisor will also need to consider whether a product is suitable for a client in view of his existing portfolio composition.
  • When a client wants to buy a complex product without having received advice, intermediaries will need to assess the capacity of the client to bear full or partial losses and their risk tolerance. In case of a negative appropriateness assessment, the intermediary will only be allowed to proceed with the transaction at the clients' explicit request. 

How will the package improve access to independent advice?

To encourage the provision of independent and cheaper advice, the package introduces the possibility for independent advisors (advisors that cannot receive inducements and advise on products from different providers) to provide advice limited to a sufficient range of diversified, non-complex and cost-efficient financial instruments. For these products, distributors will be able to perform a suitability assessment on the basis of more limited information about the client and customers and thereby maybe offer such services. Given that the advice is limited to well-diversified and non-complex products, an assessment of the knowledge and experience of clients, as well as their portfolio diversification, will not be required.

6. Measures to ensure that marketing communication of investment opportunities is clear, fair, and not misleading - social media and influencers

Marketing communication is a valuable tool for firms to commercialise their financial products and services. With the increase of digital services, marketing communication and techniques are shifting increasingly to the online space and have partly replaced traditional sales channels.  As the digital world changes quickly and allows for marketing activities in closed channels (e.g. chat groups), the package improves investor protection by providing clarity to firms on their obligations with regards to marketing communications and gives supervisors the tools to better enforce the rules.

The proposed measures will ensure that supervisors can better enforce the obligation that marketing communications should be clear, fair, and not misleading, regardless of the channel through which they are distributed and whether performed directly by the investment firms or indirectly, for example via financial influencers or "finfluencers". 

How does the package protect retail investors from being misled by marketing?

Studies show that when making decisions, investors are often influenced by the first piece of information that they see. With digitalisation and the rising use of social media, this is often advertisement. The package introduces further requirements in relation to the content of marketing advertisements of financial securities. Advertisements will need to be fair, clear and not misleading. They will have to present risk and benefits in a balanced way and include key product characteristics. This will ensure that the first piece of information that investors often see provides them with a more objective overview.

What will this package do to address concerns related to "finfluencers"?

The use of "finfluencers", i.e. financial influencers, to advertise investment products, services or firms via social media or other digital channels has become a prominent part of investment firms' marketing strategies. In addition to the proposed requirements on the content of marketing itself, the package makes investment firms liable for any marketing done on their behalf. Investment firms will be responsible for the content and compliance of marketing communications, regardless of whether influencers or other third parties have been paid or simply incentivised to create promotional content. For example, an influencer's attendance and promotion of a free event by an investment firm will be considered marketing communication, for which the firm will be responsible. The same provisions will apply if a video influencer talks about a firm they were sponsored by. In such cases, if the marketing communication is misleading, competent authority may for example require the cessation of the communication or fine the financial intermediary who is remunerating the finfluencer.

How will these rules be enforced?

The package introduces new provisions to ensure the effective enforcement of marketing provisions:

  • Management bodies will become responsible for and receive reports on a firm's marketing activities;
  • Firms will need to keep records of all marketing communications and strategies about marketing practices, in order to ensure that sufficient information is available for competent authorities to conduct investigations;
  • Competent authorities will gain new enforcement powers: they will be able to suspend or prohibit marketing communications or practices, and in more serious cases request the restriction of access or removal of online content. 

7. Measures to improve financial literacy

What measures do you propose to improve financial literacy?

Increasing the levels of financial literacy is one of the Commission's priorities under the 2020 Capital Markets Union Action Plan. The Commission has identified financial literacy as a key component contributing to an EU economy in which all citizens are more financially resilient and can pursue their personal and financial objectives.

The package introduces new provisions that aim to spur Member States' action in the area of financial literacy, by encouraging them to introduce national measures to support the financial education of retail investors. The final objective is ensuring that all citizens feel more empowered to make decisions that contribute to their own financial well-being, such as in preparing for retirement, better managing budgets, savings or debt but also increasingly in engaging in investment activities. Particularly when investing, citizens should feel empowered to understand the risks and benefits involved, as well as the financial advice they receive. This does not mean that they are expected to become experts in financial services, but rather that they have the means to develop the necessary knowledge, confidence and awareness to make decisions that meet their financial needs.

How do the proposed measures fit with other work streams on financial literacy?

These measures are part of ongoing work on financial literacy. The Commission is working with the OECD to develop joint 'financial competence frameworks' that lay out the knowledge, skills and behaviours that individuals need in order to ensure their financial well-being throughout their lives. The Commission and OECD published a joint financial competence framework for adults in January 2022. The publication of another joint framework for children and teenagers is expected in autumn 2023. Moreover, the Commission collaborates directly with Member States and national administrations by supporting the development of programs dedicated to domestic financial education initiatives.

8. Measures to improve knowledge and competence of investment advisors

Why do you propose revised requirements on the knowledge and competence of advisors?

Financial advisors play a critical role as gatekeepers to the financial system and are thus of particular importance to retail investors, especially those engaging in investment activities for the first time. Ensuring that citizens have access to consistent and high-quality financial advisory services is therefore essential.

The Commission's research had found that the level of qualifications, knowledge and skills of financial advisors differs across Member States and across applicable regulatory frameworks. The proposed amendments aim to provide retail investors with assurance that the level of knowledge and competence of financial advisors meet the required standards regardless of where they are located in the EU, including in relation to sustainability, to increase retail investors' confidence in advice, and to create a better level-playing field for market operators offering advice.

What are the proposed amendments?

The package strengthens and harmonises, to a certain extent, the requirements on knowledge and competence of advisors set out in MiFID II and IDD:

  • MiFID II: Specific requirements on knowledge and competence of advisors (which are currently stipulated in ESMA Guidelines) are promoted to legal requirements (as in IDD) and an additional element regarding sustainable investments is introduced. Compliance with the requirements also has to be proven by obtaining a certificate.  In addition, and in line with current requirements under IDD, a limited requirement for ongoing professional training is introduced. 
  • IDD: Requirements on knowledge and competence are strengthened and aligned with the requirements under MiFID II. Compliance must be proven by a certificate. 

9. Measures to reduce administrative burdens and improve the accessibility of products and services for sophisticated retail investors

What is investor categorisation and what changes do you propose?

MiFID II introduced significant investor protection measures that helped ensure adequate protection of consumers and prevent mis-selling. These measures are a critical safeguard for many retail clients and are set out in a comprehensive set of regulatory provisions. However, the provisions have at times been deemed to be disproportionate in relation to more sophisticated and experienced investors who stand apart from the average retail investor and who may not necessarily need the same level of protection.

In order to ensure proportionality and reduce the administrative burden, the package adjusts the eligibility criteria for professional investors upon request. It does so by lowering some of the existing monetary thresholds and allowing to better take into account the client's experience as well as education, where relevant for the envisaged transactions. The broadening of the criteria would allow individuals with the relevant experience and knowledge to seek an exemption from the investor protection framework, where they so desire.

10. Measures to strengthen cross border supervision and enforcement

How and why do you propose to strengthen cross border supervision?

National competent authorities face difficulties when supervising the cross-border activities of firms authorised in their own jurisdictions. The package seeks to improve the cooperation between national competent authorities and protect consumers using cross-border provision of services, by enhancing and accelerating the process of cooperation of 'home' and 'host' national competent authorities to ensure effective supervision of cross-border service providers.


Legal texts

Source: European Commission