The Retail Investment Strategy: Lacking a ban, packing alternatives

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Retail investment – consumers investing in the opportunities offered by capital markets – is a cornerstone of the Capital Markets Union. Yet retail investment levels in the EU are lagging, hurting the financial prospects of households and businesses alike.

Through the recently proposed Retail Investment Strategy, the European Commission aims to change this. And while those expecting a sea change – particularly in the form of an inducements ban – might be disappointed, a closer look reveals a proposal with potential.

This follows on from a concerted effort to address (1) biased advice, (2) the lack of low-cost, non-complex investment products being offered and (3) the low comparability and comprehensiveness of standardised documents.

The proposal is vast, and contains much more, but these three issues are key to improving competition, lowering costs and increasing trust. Address them successfully and consumers will be enticed to move money from savings accounts to the markets, boosting retail investment levels.

Jelmer Nagtegaal is a Researcher at ECMI and CEPS