On Wednesday 4 October, French MEP Stéphanie Yon-Courtin (Renew Europe) published her draft report on the retail investment strategy (see EUROPE 13187/21). The text broadly modifies the European Commission’s initial proposal, in particular by opposing the partial ban proposed by the European Commission on the payment of commissions to advisers in the case of execution sales, without any advisory service.
“On the question of the partial ban on retrocessions and commissions, the Commission was hasty. The switch from a total to a partial ban was a hasty political decision. This would appear to be a minor manoeuvre designed to eventually introduce a total ban. This is why I have removed the partial ban on the report”, explained Ms Yon-Courtin.
Similarly, the draft report proposes a revision clause within 5 years, as opposed to the 3 years recommended by the Commission. “As drafted now, the rendez-vous clause would simply reinstate the ban in 3 years’ time”, she added. Several Member States are also pushing in this direction (see EUROPE 13262/15).
It remains to be seen whether negotiations within the political groups on the issue of commissions will result in a compromise, with the Greens/EFA and S&D groups in favour of a total ban on commissions.
“I’m waiting to see what my colleagues have to say. There is the argument of banning because of conflicts of interest, but it’s not as simple as that”, commented Ms Yon-Courtin, pointing out that MEPs from other political families had been sensitive to the issue of the network of financial advisers in the regions.
A blacklist of financial influencers
In addition, the draft report introduces certain elements to strengthen national supervision in the case of investments in another Member State, by means of a principle obliging companies to establish themselves in the country where they operate, in order to avoid giving preference to places where legislation is less restrictive.
In addition, the issue of digital technology - and online financial influencers - is also addressed. On this point, the draft report proposes to go further than the Commission by giving more responsibility to Member States so that they can denounce companies and personalities who take part in misleading marketing practices, particularly on social networks. A ‘black list’ could be introduced.
The draft report also revisits the approach to the best interest test, which has already been criticised by several industry associations (see EUROPE 13195/28). On this point, said Ms Yon-Courtin, the aim is to go beyond price considerations and add qualitative elements so as to oblige advisers to provide their advice on “a wider range of products, taking into account costs as well as externalities”.
European Parliament members have a lot of work ahead of them on ‘benchmarks’. Those proposed by the Commission have all been removed from the draft report in order to “achieve something more serious”, said the rapporteur. “This could amount to comparing the incomparable. The proposal could lead to the introduction of cheaper products, particularly from the US”, she added, saying she feared it would “kill off the European market”.
A potential plenary vote in February 2024
The political groups will have to reflect on the issue of financial education for investors so that they can be better informed. Work will also be carried out on key information documents, designed to provide information on packaged retail investment and insurance products (‘PRIIPs’). “It’s a relatively consensual subject with colleagues, but we need to fine-tune it to make it more concise, clearer, simpler and more digestible”, summarised Ms Yon-Courtin.
MEPs will be able to table their amendments until 26 October. For the time being, the aim is to achieve a vote in the European Parliament’s Committee on Economic and Monetary Affairs by the end of January 2024. The text could then be put to the plenary European Parliament vote in February. (Original version in French by Thomas Mangin)