The European Commission’s initiative to create a ‘Savings and Investment Union’ was given a generally positive reception on Friday 28 March at a conference organised by Better Finance, which represents retail investors in the financial sector. Several speakers stressed the importance of Member States taking this issue seriously, in particular by providing the right tax incentives and helping people to develop their financial skills.
“I think we share the objective of enabling people to invest better”, said Maria Luís Albuquerque, European Commissioner for Financial Services. To achieve this, she added, people need to overcome their “mistrust” of the capital markets, by being convinced of the “real benefits” they can derive from investing part of their savings, in particular to guarantee their standard of living in retirement.
The European Commissioner called for an “ambitious” agreement on the legislative package governing retail financial services that would “stimulate competition” between providers, develop “high-quality financial products” and minimise the administrative burden.
A first trilogue negotiating session between representatives of the European Parliament and the Council of the EU took place on Tuesday 18 March (see EUROPE 13602/21).
Projects. Ms Albuquerque referred to the series of ‘blueprint’ measures that the Commission will present by the third quarter to establish a European model for savings and investment accounts and products for retail investors, building on national best practice (see EUROPE 13603/5).
Speaking on behalf of the EU institution, AndreaBeltramello saw “a lot of potential” in the use of these accounts as an instrument offering simpler, more varied and less costly ways of dealing with capital markets.
To stimulate people’s desire to invest, “tax incentives play an important role”, noted Ms Albuquerque, believing that the right incentives in this area will help people to make the right investment choices. “The EU cannot harmonise, but it can recommend to Member States the best ways to use these incentives”, Mr Beltramello added.
Specific recommendations from the Commission are expected before the summer.
With savings invested in simple bank deposits totalling €10,000 billion in the EU, the executive director of Better Finance, Aleksandra Mączyńska, felt that “the financial system has been failing citizens for too long”. In her view, the cause was “high costs, little return on investment and the complexity” of the procedures. Too many people forgo their tax allowance when they invest elsewhere in the EU, she pointed out.
Florian Prucker, head of the pan-European Scalable platform for retail investors, began by praising the advantages of the regulatory framework, such as the European passport. “The biggest barriers for us are around taxation. In Germany we don’t have good pension wrappers for retail companies. They’re all gated by guarantees or forced annuities”, he nevertheless considered. He advocated the possibility for financial companies operating on a cross-border basis to pay taxes on behalf of their customers.
How can we create a level playing field where retail investors pay no more than 2% in fees for their investments? - asked Sebastian Külps, on behalf of Vanguard Europe. In his view, tax incentives are a good way of convincing savers to invest.
But, according to Ben Granjé, who chairs the Flemish Retail Investors Association (VFB), “the fact we love tax incentives so much is a testament of the lack of financial education”, in that it should help investors to make informed choices in line with their investment objectives. (Original version in French by Mathieu Bion)