I've not seen much coverage of the proposed EU Retail Investment Strategy which could have far reaching impact on the Financial Advice market in Ireland.
Key points are
The European Commission has published its much-awaited Retail Investment Strategy, covering retail and insurance-based investment products.
The proposals have some controversial aspects – particularly in relation to inducements and value for money – so negotiations between the European Parliament and the Council could be lengthy and result in significant changes to the text.
Nevertheless, the proposals give an important indication of the Commission’s intention, the direction of travel and what some of the key impact areas are likely to be.
While the strategy does not include a full ban on inducements, some of the proposals could have a significant impact on the business models and revenues of EU retail investment firms.
Taken together, the following proposed requirements could result in downward pricing pressure on both product charges and distribution costs, including inducements:
the requirement for product manufacturers and distributors to assess whether total costs and charges are justified and proportionate (including comparing against benchmarks to be produced by ESMA and EIOPA);
the requirement for advisors to recommend cost-efficient products;
and the ban on inducements for execution-only business.
Manufacturers may need to consider amending pricing or product features to make them more cost-efficient, while distributors may need to review their product ranges and consider their own revenue models.
In their current form, the proposals would also have some significant operational impacts, including the need for strong governance and operational processes to assess whether costs and charges are justified and proportionate, to assess whether product features are necessary to achieve particular investment objectives, and to redesign suitability and appropriateness tests. Firms may also need to update their IT systems to comply with the new investor disclosure rules.
A good summary can be found here https://lnkd.in/gj_EuQVs
Key points are
The European Commission has published its much-awaited Retail Investment Strategy, covering retail and insurance-based investment products.
The proposals have some controversial aspects – particularly in relation to inducements and value for money – so negotiations between the European Parliament and the Council could be lengthy and result in significant changes to the text.
Nevertheless, the proposals give an important indication of the Commission’s intention, the direction of travel and what some of the key impact areas are likely to be.
While the strategy does not include a full ban on inducements, some of the proposals could have a significant impact on the business models and revenues of EU retail investment firms.
Taken together, the following proposed requirements could result in downward pricing pressure on both product charges and distribution costs, including inducements:
the requirement for product manufacturers and distributors to assess whether total costs and charges are justified and proportionate (including comparing against benchmarks to be produced by ESMA and EIOPA);
the requirement for advisors to recommend cost-efficient products;
and the ban on inducements for execution-only business.
Manufacturers may need to consider amending pricing or product features to make them more cost-efficient, while distributors may need to review their product ranges and consider their own revenue models.
In their current form, the proposals would also have some significant operational impacts, including the need for strong governance and operational processes to assess whether costs and charges are justified and proportionate, to assess whether product features are necessary to achieve particular investment objectives, and to redesign suitability and appropriateness tests. Firms may also need to update their IT systems to comply with the new investor disclosure rules.
A good summary can be found here https://lnkd.in/gj_EuQVs
