EFAMA’ s reply to the European Commission's public consultation on a retail investment strategy for Europe

EU retail investments: comprehensive strategy to increase retail investor participation required

EFAMA wholeheartedly supports a retail investment strategy that gives EU citizens the necessary tools and the confidence to put their savings to work by investing in capital markets.

While the themes covered in the European Commission consultation on a retail investment strategy for Europe are all highly relevant[1], they focus primarily on technical amendments to already existing rules. At this stage, the consultation fails to outline a comprehensive strategy to increase retail investors’ participation in capital markets.

The patchwork of rules currently governing retail investor participation is either misaligned or tends to focus too narrowly on investor protection and on the risks associated with investing. There is an urgent need to also concentrate on the benefits of investing. It is a well-documented fact that people lose money by leaving their savings in their bank accounts. EFAMA’s latest Market Insights evidenced that, on average, UCITS equity funds delivered a total net return of 108% in real terms between 2010-2019, whereas bank deposits lost 10% in net value over the same period.

Easy access to financial advice for retail investors is essential to ensure that retail clients invest in financial instruments that are suited to their individual needs and preferences. The ban on inducements contemplated in the consultation document would make it harder for less affluent citizens to access much-needed financial advice, thereby contradicting the CMU objective of increasing retail participation in capital markets.

Tanguy van de Werve, EFAMA Director General: ”We consider investment advice and its availability paramount to increasing retail participation in European capital markets, alongside improved financial disclosures and increased financial literacy.”

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