Agence Europe has obtained a copy of the non-papers on simplification proposals put forward by France, the Czech Republic and the Netherlands as part of discussions on the legislative package of the Retail Investment Strategy (RIS) that have taken place over the last few weeks in the EU Council.
The measures proposed by these countries were intended to complement the recommendations of the European Commission (see EUROPE 13635/16) in the hope of reaching an agreement with the European Parliament (see EUROPE 13649/24) under the Polish Presidency of the EU Council.
In the meantime, Warsaw has thrown in the towel, deciding on Friday 23 May to refer the interinstitutional negotiations (‘trilogue’) on this dossier to the Danish Presidency (see EUROPE 13649/24).
French and Czech proposals. In a joint non-paper, Paris and Prague warned of the risk of the text moving away from its initial objective of encouraging the participation of retail investors in financial markets.
Both countries have advocated streamlining the ‘customer journey’, removing certain unnecessary requirements in the suitability and adequacy tests and cautiously framing the new simplified advice regime.
In addition, they proposed to reduce the administrative burden on financial advisers, in particular by revising the ‘best interests of the client test’, which is considered too cumbersome.
In their view, a more flexible ‘value-for-money’ mechanism, based on European guidelines rather than rigid benchmarks, would make it possible to limit cost bias without increasing the regulatory burden.
As far as incentives are concerned, France and the Czech Republic have argued for the partial or complete abolition of the new test introduced by the Commission, which is considered too complex.
The two EU Member States have also opposed making the Key Information Document (‘KID’) more cumbersome, and want to see it evolve into a more accessible interactive digital format.
Finally, they defended a pragmatic approach to financial education, strengthening existing initiatives without creating new European structures.
Dutch proposals. The Netherlands, for its part, has formulated eight measures aimed at reducing certain obligations for businesses and simplifying the ‘customer journey’.
The Hague has recommended maintaining the existing requirements governing the design and sale of retail financial products, through the Product Oversight and Governance (POG) framework. “Proposals to limit the scope of the Product Oversight and Governance (POG) requirements raise significant concerns”, the Netherlands pointed out in another non-paper.
This framework requires companies to check that the products they offer are suitable for a given audience. The Netherlands has opposed any attempt to reduce the scope of protection, arguing that even certain products considered simple can carry significant risks.
According to the Netherlands, if these safeguards were weakened, individuals could find themselves exposed to investments that are ill-suited to their profile, which could undermine their confidence in the financial markets.
Among other proposals, The Hague has suggested simplifying certain targeted obligations, particularly for corporate issuers in IPOs, and has advocated easing the suitability regime for retail investors, provided they turn to simple, inexpensive and well-diversified products.
According to the Netherlands, the suitability statement given to clients when they receive investment advice could be provided at the start of the relationship and updated only if there is a change, rather than every time advice is given.
The Hague has also proposed adopting a clearer and more hierarchical presentation of information and removing certain obligations deemed unnecessary or anxiety-provoking, such as the automatic alert (‘10% depreciation obligation’) in the event of a 10% fall in the value of a portfolio.
To see the French and Czech proposals: https://aeur.eu/f/h8s
To see the Dutch proposals: https://aeur.eu/f/h8r (Original version in French by Bernard Denuit)