On Tuesday 24 April, the European Commission published a study aiming to identify the obstacles consumers continue to face in the EU when seeking financial advice or wishing to purchase a retail investment product.
Broadly, the study reveals that although consumers have access to a wide range of products, they still face a number of obstacles when receiving or comparing information on retail investment products.
The study looks at 15 member states (Belgium, the Czech Republic, Denmark, Estonia, France, Germany, Italy, Luxembourg, the Netherlands, Poland, Portugal, Romania, Spain, Sweden and the United Kingdom) selected on the basis of the size of their market, date of joining the EU and diversity of policies in place.
The study notes that there are major differences in the costs of retail investment products between member states and that the charges for the same category of investment products vary considerably. It also stresses the promising potential of new distribution models based on financial technology, whilst calling for increased supervision.
The European federation of users of financial services, Better Finance, notes that the study confirms what it has been saying for years: the average individual investor is overwhelmed by the complexity and uncertainty involved in the investment products available in the EU.
In particular, it highlights the lack of transparency and harmonisation of information available on the websites of distributors in the EU. Concerning costs and charges, some distributors are not presenting this information or only partially, it states, which means that it is still difficult today for individual investors to understand and compare this information to make an enlightened investment decision. “This confirms the urgent need for independent and cross-border comparison websites”, the federation states.
The scope of the study is, however, limited due to the availability of data, but also because it was carried out in 2017, before a number of regulatory changes likely to affect the markets entered into force (MiFID II, PRIIPs, 'insurance distribution' directive), the organisation stresses.
Reflections on the subject will continue on 29 June at a public hearing hosted by the Commission. The study is available at: https://bit.ly/2FihT5M . (Original version in French by Marion Fontana)