Why Should Manufacturers and Distributors Ensure the Delivery of Quality Products to Retail Investors?
The EU Retail Investment Strategy (RIS), introduced on June 25, 2023, addresses high fees and other barriers faced by retail investors in capital markets. It aims to create a safer, more transparent environment, enhancing confidence and trust as part of the EU’s Capital Market Union (CMU) action plan.
Legislative Progress
The RIS legislative process has progressed, with the EU Council agreeing on its negotiating mandate in June 2024. Trilogue negotiations are set to begin, with member states given 30 months to transpose the Omnibus Directive into national laws and application starting 36 months post-entry into force. ESMA and EIOPA will draft Regulatory Technical Standards (RTS).
Key Changes Introduced by the RIS
The RIS introduces significant changes:
- Inducements: Firms must ensure inducements do not bias recommendations.
- Research Costs: Rebundling research costs is allowed without thresholds.
- Suitability and Appropriateness Assessments: Required before offering products.
- Undue Costs: Justify costs charged to investors, with reimbursements for undue costs.
- Value for Money (VFM) Assessments: Evaluate if products offer good value compared to peers and benchmarks.
- Cost-Efficiency at Advice Stage: Recommendations must consider cost-efficiency.
- Disclosures on Costs and Charges: Provide detailed cost information for transparency.
- Annual Statements: Provide annual statements detailing investments and costs.
- Additional Disclosures: Standardized reporting for suitability and appropriateness assessments.
- Excluding certain bonds and pension products.
- Simplifying Key Information Document (KID) requirements.
- New KID sections for product overview and sustainability.
- Removing frequent KID revisions for unavailable products.
Support from NeoXam
NeoXam assists manufacturers and distributors in navigating these changes. Our DataHub solution helps establish peer groups and assess product value, ensuring compliance with RIS requirements. The Impress solution covers PRIIPs functionalities, integrating new amendments.
Ensuring quality products for retail investors builds trust and fosters a robust investment environment. Embrace the EU Retail Investment Strategy to enhance transparency, reduce costs, and provide real value to your clients.
Download the full whitepaper below.
