European Federation of Investors and Financial Services Users
BETTER FINANCE
Better Finance is a non-profit organization representing individual investors and financial services users.
Lobbying Activity
Meeting with Patrick Lobis (Head of Representation Communication)
20 Jan 2026 · Saving and Investment Union
Meeting with Tilman Lueder (Head of Unit Financial Stability, Financial Services and Capital Markets Union)
2 Dec 2025 · Pensions
Meeting with Stéphanie Yon-Courtin (Member of the European Parliament, Rapporteur)
7 Oct 2025 · Retail investment strategy
Investor federation urges EU to prioritise listed companies over start-ups
30 Sept 2025
Message — The organisation calls for a two-track approach: first harmonising rules for listed companies under ESMA supervision, then creating a separate framework for private firms with safeguards. They want IPOs to be EU-level processes with unified shareholder rights and collective redress mechanisms.123
Why — This would reduce fragmentation and compliance costs while protecting retail investors from high-risk start-ups.45
Impact — Venture capital and start-ups lose simplified direct access to retail investor funding.6
Meeting with Stéphanie Yon-Courtin (Member of the European Parliament, Rapporteur)
26 Sept 2025 · Retail Investment Strategy
BETTER FINANCE urges transparency in insurance capital rule changes
5 Sept 2025
Message — They support using excess capital for productive investments like venture capital and infrastructure. Supervisors must monitor freed-up funds and preserve strict reporting to ensure insurer accountability.123
Why — This would help individual investors secure higher returns from diversified long-term assets.45
Impact — Insurers may lose cost-saving opportunities if strict reporting and oversight remain mandatory.6
Meeting with Yann Germaine (Acting Head of Unit Financial Stability, Financial Services and Capital Markets Union)
1 Sept 2025 · Discussion on Insurance Guarantee Schemes
Meeting with Cristina Dias (Cabinet of Commissioner Maria Luís Albuquerque), Philippe Thill (Cabinet of Commissioner Maria Luís Albuquerque) and Finance Watch
6 Aug 2025 · Financing of both institutions.
Response to Supplementary pensions – review of the regulatory framework and other measures to strengthen the sector
21 Jul 2025
BETTER FINANCE welcomes the European Commissions intention to review the EU framework on supplementary pensions. Ensuring an adequate retirement income is one of the key motivations for EU citizens to save and invest, especially as they become aware of the demographic challenges to the sustainability of pay-as-you-go pension schemes. The diversity of the European supplementary pension landscape shows the creativity of private pension product providers to respond to this concern of EU citizens. Nevertheless, as BETTER FINANCE annual research on supplementary pensions shows, too many of these solutions in fact make the problem worse due to insufficient long-term financial performance (BETTER FINANCE, 2024, "Will You Afford to Retire?"). Out of 40 product categories, the median 10 year annualised performance after costs and inflation is a meagre 0.6% (0.8% for occupational pensions, 0.1% for personal pensions), with some personal pension products returning a loss of up to 2% of the actual value of savings. What is the point of saving your whole life if the money men cannot even protect the real value of your savings? In many cases, pension savers would in fact be better off investing directly into the capital markets: comparing returns of pension products with those of a hypothetical, rather conservative investment portfolio of European equity and bonds, we find that 34 out of 48 product categories we analyse fail to beat that simple benchmark. Among those 34 product categories, the average distance to the performance of the hypothetical portfolio amounts to 37.1 percentage points of cumulated performance (see attached). These figures are, by themselves, a powerful call for action: the status quo is clearly detrimental to pension savers and promises a high risk of old-age poverty. BETTER FINANCE then urges the Commission to take decisive action to reform the supplementary pensions framework to ensure that, first, EU citizens, as pension savers receive appropriate information to draw adequate financial plans for their retirement and select the pension saving products that are most likely to generate an improvement of their purchasing power at retirement. Second but crucial, to ensure they are empowered to take the decisions necessary to improve their retirement plans. Clear, comparable, reliable information about ones pension savings across all pillars is a necessity for accurate retirement planning and pension product selection. We strongly believe that basic information about accrued benefits, costs and performance are the core pieces of information that a pension saver should receive from its supplementary pension scheme managers, whatever the specific form (occupational vs. personal, insurance-based or else) of those supplementary pension schemes. A thoroughly revised PRIIPS Key Information Document should apply to Personal Pension Products (PPPs). A standardised set of fundamental information about supplementary pensions across all pillars would, furthermore, facilitate the development of comprehensive pension tracking systems (PTS) and long-term investment product comparison tools, overall empowering pension savers. We also stress that pension dashboards can be more than a tool for policy-makers and should be publicly accessible: an aggregate view of the pension landscape in their country can help individuals assess their situation in comparison to the rest of the population and the performance of their pension products in comparison to the market. Beyond information, however, pension savers must be able to act when they believe that they are not on track with their pension plans: the possibility to save more is not enough, one should have the possibility to saver better, the right to take their savings out of an underperforming plan and place them into a pension scheme that will provide them with a better solution with the right balance of performance and safety. We further elaborate on this in the attached document.
Read full responseBetter Finance urges simpler EU labels to curb greenwashing
30 May 2025
Message — The organization proposes a simple three-category labeling system for investment products. They advocate for a short and simple disclosure style for non-experts. Transition funds must include mandatory engagement to ensure they drive real change.123
Why — Clearer rules help retail investors avoid misleading claims and potential greenwashing.4
Impact — Financial advisors and fund managers lose the ability to market vague products.5
Meeting with Maria Luís Albuquerque (Commissioner) and
2 Apr 2025 · Savings and Investments Union – discussion with Swedish financial market infrastructure representatives
Better Finance warns against weakening EU securitisation safety rules
26 Mar 2025
Topic — This consultation reviews the legislative framework for pooling and selling financial assets.
Message — Better Finance opposes expanding the market and wants stricter data reporting for securitised assets. They advocate for streamlining disclosure templates without lowering current transparency or safety standards.123
Why — Maintaining high standards ensures safety and financial stability for individual European savers.45
Response to Savings and Investments Union
7 Mar 2025
BETTER FINANCE - the public interest NGO advocating and defending the interests of European citizens as savers, individual investors and financial services users - has been a staunch supporter of the Capital Markets Union (CMU) initiative. We strongly align with the European Commissions focus on the Savings and Investments Union (SIU) and the CMU as pillars to drive the European economic competitiveness. The SIU is essential for creating a robust deeper Single Market that would offer EU citizens performing, accessible, and diverse investment opportunities. The sheer amount of EU citizens savings not (yet) invested in the real economy can give the EU a competitive edge, direly needed especially in the current geopolitical context. Currently, EU savers, with few exceptions, invest little in capital market products such as listed stocks, listed bonds, and low-cost listed index funds, as these products are rarely advised and sold at retail points of sale. As per the EC study on the distribution of retail investment products, the EU investors often approach their (bank) financial advisors, from whom they cannot buy simple, cost-efficient products: those are not offered to them. The current distribution system primarily favours more complex and costly packaged products, which offer (guaranteed) low returns and high fees. BETTER FINANCEs annual research (The real return of the long-term and pension savings) confirms the endemic underperformance of EU retail investment products influenced by misallocation of savings (into fixed income) and by high costs. As confirmed by another BETTER FINANCEs research (The More You Pay, the Less You Are Likely to Get) high costs correlate with low performance. BETTER FINANCE research proves that transparency and efficiency matter, and that meaningful no-nonsense information enables individual investors to make well-informed decisions. The citizen-centric approach is the only way to foster the abundant EU savings into capital marketsin particular equity ones, including small and mid-size enterprisesand drive the EU competitiveness. Therefore, BETTER FINANCE has run a call for evidence among its national member organisations. The findings are attached to our answer (together with our Manifesto). The main conclusions from the call for evidence on how to improve outcomes for individual investors and achieve the SIU: Facilitate access to simple, cost-efficient investment products and simple tools such as the Swedish Investment Saving Account (ISK). Empower retail investors with comparable and reliable information (including an EU-wide comparison portal), an effective access to shareholder general assemblies and collective redress. Rethink disclosures, starting with the PRIIPs KID: urgently fix KID by removing future performance scenarios and replace them with the past performance information (alongside that of a benchmark). Rethink tax incentives: Use them to encourage long-term investments and to link retirement planning more closely with capital market investments. Address the misallocation of EU savings and curb the fixed-income bias in the asset allocation of European insurers and pension plans (for long-term and pension savings schemes). Rethink the current distribution model and potential conflicts of interest as well as access to good quality independent advice: Being an individual investor is not a full-time job. Financial education for adults should be taking place at the point of sale. Consider launching a European Total Stock Market Index Fund, allowing European citizens to invest significantly in mid- and small-cap equities (SMEs) across all EU Member States. Provide an effective and harmonised conduct of business supervision of all retail investment products and services. Consult individual investors and organisations representing them whenever discussing measures targeting or affecting individual investors.
Read full responseMeeting with Philippe Thill (Cabinet of Commissioner Maria Luís Albuquerque)
27 Feb 2025 · Online meeting with the European Federation of Investors and Financial Services Users (Better Finance) to discuss the Retail Investment Strategy and
Meeting with Aurore Lalucq (Member of the European Parliament, Rapporteur)
20 Feb 2025 · Savings and investments Union (SIU)
Meeting with Vincent Hurkens (Cabinet of Executive Vice-President Stéphane Séjourné)
24 Jan 2025 · Savings and Investment Union
Meeting with Markus Ferber (Member of the European Parliament)
23 Jan 2025 · Savings and Investments Union
Meeting with Maria Luís Albuquerque (Commissioner) and
11 Dec 2024 · Retail investment The Savings and Investment Union
Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)
25 Oct 2024 · Exchange of views on priorities and co-operation for the new legislative term
Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)
13 Dec 2023 · Retail investment strategy, CMU, financial education
Response to New EU system for the avoidance of double taxation in the field of withholding taxes
18 Sept 2023
For BETTER FINANCE, the ECs FASTER Proposal can bring procedural progress in addressing longstanding obstacles to tax recovery for investors dealing with their cross-border investment income. We welcome an EU-wide framework to streamline withholding tax refund modalities. However, it remains key to address potential exclusions, gaps and cost uncertainties to ensure that all retail investors benefit from their rights derived from securities ownership and to stimulate intra-EU investment. By harnessing the power of digitalisation, the proposal tackles a major hurdle related to tax residency verification by setting up a standardised European e-TRC, along with reporting standards. The new EU-wide WHT tax procedures, i.e. relief at source (RAS) and/or the quick refund system (QRS) options, are set to introduce speed and efficiency. We do, however, caution that these procedures solely rely on certified financial intermediaries. Requiring only large institutions and CSDs to register, mandated by EU countries, poses risks of leaving many investors without access to WHT facilities: Art. 10 (3)(a) explicitly allows MS to discard WHT RAS/QRS if any intermediary is not certified. We are concerned that the new provisions may thus become partly obsolete. Moreover, investors who rely on intermediaries will be unable to ascertain the chains certification. Thus, we favour a compulsory registration, also to truly achieve transparency throughout the entire chain of intermediaries. The proposal does not address the myriad standard refund procedures that investors may choose or be required to use. We recommend the introduction of harmonised language and templates, notably to facilitate self-processed WHT claims directly with tax administrations. This can be achieved by ensuring that requests for documents from banks can be made at no cost to the investors. Besides, we call to differentiate professionals from low-risk retail investors regarding tax abuse and lighter check regimes. A right approach could be to propose a compulsory RAS procedure for small investors reclaiming annual dividends of up to EUR 5000. Reduced verification requirements for QRS and direct, simpler standard procedures should also be possible for claims of the same amount. The proposal should treat tax recovery as a fundamental right for shareholders by ensuring its cost effectiveness since retail investors often claim small amounts. The proposed automation/digitalisation systems should result in economies of scale to factor in financial intermediaries service charges. Concentration risk arising from registration requirements needs to be carefully considered. The imposition of fees for automated data flows along the chain should be avoided, while a free option, i.e. a self-processed standard procedure, should be made a viable alternative. To achieve its objective, the proposal defines the term registered owner but not beneficial owner as referenced in Art. 11(1)(a) on due diligence. To ensure compliance with an EU WHT framework that serves retail investors, its definition or set of criteria should be established to uniformly identify the ultimate beneficial owner and tackle nominee concept issues. This would help avoid any transnational discrimination between the source income country and the country of residence. It is also vital for templates (Annex II) to be fully harmonised; e.g. also for the record date. We also call for a streamlining of processes through an EU register or passporting regime that would prove adequate. The minimum would be the creation of a single portal enabling investors to submit applications for income tax exemption and access clear, standardised cross-national documentation and terminology. Finally, the introduction of a set of EU tax rules to harmonise MS tax rates should be considered, and at the very least, existing bilateral tax treaties within the EU that fail to prevent double taxation on investment income shall be prohibited.
Read full responseMeeting with Herbert Dorfmann (Member of the European Parliament, Rapporteur)
8 Sept 2023 · Exchange on FASTER
Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)
7 Sept 2023 · Retail Investment strategy, the Listing Act package proposal and the MiFIR review
Meeting with Mairead McGuinness (Commissioner) and
18 Jul 2023 · Distribution of Retail financial products
Meeting with Valeria Miceli (Cabinet of President Ursula von der Leyen) and Bureau Européen des Unions de Consommateurs and Finance Watch
25 Apr 2023 · Retail Investment Strategy with a particular focus on ban on inducements
Response to Facilitating small and medium sized enterprises’ access to capital
28 Mar 2023
BETTER FINANCE welcomes the stated objectives of the listing act review for prospectus standardisation and streamlined IPO cost reduction, particularly for SMEs. Investor protection both relies on reporting that must be adequate, accessible and on fair treatment. Our first concerns relate to a minimis multiple voting rights directive that would unbalance power between shareholders while creating inconsistent practices across the EU. Multi-Voting-Shares (MVS) are against the one share one vote principle in international markets, providing equal rights to all shareholders regardless of their shareholding size and this should generally be avoided. Only through certain cases of initial listing of SMEs GM could the MVS be possible, as we acknowledge this may avoid disincentivize directors to go pubic. However, any MVS must apply under maximised EU-wide application (not the preferred EC option) and must remain temporary and attached to the initial holder only. This provision must come with harmonised EU safeguards for all shareholders. In particular, sunset clauses should be mandatory, not optional (i.e. 5y post-IPO for time-based ones), along with specific vote limitations and controls (including provision on ESG resolution). Clear transparency of share information must be provided for minority shareholders as clearly identifiable in the summary prospectus. In general, new share class contain the risk of discriminatory treatment and Article 5 safeguards may prove too weak in their transposition, whereas investors still lack clear declaimers on type of shares traded. Therefore, reclassification of existing shares or the emission of new MVS in existing structures should always be prohibited since unequal voting rights are perceived as detrimental by engaged investors and that the European Commission should promote equitable companies governance (G part of ESG), by strengthening minority shareholders rights in the first place. We also welcome the standardisation of the prospectus types and usage, and the possibility to use English as customary in the financial sphere, limit its length and make it accessible digitally. The summary prospectus remains the most consulted by retail investors and its English version, alongside the national languages should remain for EU investors. In addition, the summary needs further standardisation and to be elaborated in plain language to become an investor-friendly document, and any addition of reference information should be strictly limited to avoid content overload. Following ESMA evaluation, and local market evidences, article 33(7) of should include a clear provision that instruments listed as primary on the SME GM can only be admitted to another trading venue with the explicit consent or at the request of the issuer. The condition under which an order book split of instruments of SMEs (with small capitalisation) brings liquidity risk to markets and prove detrimental for price formation (increase spread) for investors, on one hand, and any potential benefit of wider investors access, on the other, should be reassessed for such markets. On MAR, we welcome clarity on defining insider information; however, the new proposed rules may prove difficult to enforce and supervise, rather, a proper upkeep of insider lists proved beneficial. Moreover, any establishment of a CMOBS mechanism should include data from bilateral trading space (SIs and OTC transactions) to ensure market integrity. In addition, the new threshold disclosing managers transactions may obstruct valuable market information as it also proves crucial to inform on price formation. Finally, for bonds, a focus on democratisation and trade facilitation is needed in general. For simple corporate bonds, the prospectus could be simplified or the denomination of 100,000 reduced for wider investors' access. Also, any new ESG data documents for debt securities should be summarized and reflect standards (EU Green Bonds, SFDR).
Read full responseMeeting with Andrea Beltramello (Cabinet of Executive Vice-President Valdis Dombrovskis), Michael Hager (Cabinet of Executive Vice-President Valdis Dombrovskis)
27 Mar 2023 · Retail Investment Strategy
Meeting with Agnieszka Drzewoska (Cabinet of Commissioner Mairead Mcguinness), Deirdre O’Hea (Cabinet of Commissioner Mairead Mcguinness), Florian Denis (Cabinet of Commissioner Mairead Mcguinness), Katherine Power (Cabinet of Commissioner Mairead Mcguinness), Patricia Reilly (Cabinet of Commissioner Mairead Mcguinness)
15 Dec 2022 · Retail investment Strategy, Sustainable finance, CMU.
Meeting with Danuta Maria Hübner (Member of the European Parliament, Rapporteur)
14 Jul 2022 · MiFIR Review
European Investors Group Criticizes EU Retail Investment Consultation Process
31 May 2022
Message — The organization criticizes the consultation as duplicating previous efforts and missing key investor protection issues. They argue sufficient evidence already exists to implement the retail investment strategy without further delay.12
Why — This would accelerate protections for retail investors across multiple policy areas they've researched.34
Meeting with Florian Denis (Cabinet of Commissioner Mairead Mcguinness), Nicolo Brignoli (Cabinet of Commissioner Mairead Mcguinness) and
25 May 2022 · Retail Investment Strategy
Meeting with Florian Denis (Cabinet of Commissioner Mairead Mcguinness), Nicolo Brignoli (Cabinet of Commissioner Mairead Mcguinness)
18 Feb 2022 · Retail investment strategy
Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)
9 Dec 2021 · Retail investment strategy, CMU and sustainable finance
Response to Requirements for Artificial Intelligence
6 Aug 2021
Please see document attached
Read full responseResponse to Revision of Non-Financial Reporting Directive
14 Jul 2021
BETTER FINANCE welcomes the new changes on the non-financial reporting directive. For additional information please see document attached.
Read full responseResponse to Commission Delegated Regulation on taxonomy-alignment of undertakings reporting non-financial information
2 Jun 2021
BETTER FINANCE welcomes the Delegated act providing obligations for certain large undertakings on criteria to publish non-financial information. for additional information please see the document attached.
Read full responseMeeting with Mairead McGuinness (Commissioner)
22 Apr 2021 · Capital Markets Union Sustainable Finance
Response to Europe’s digital decade: 2030 digital targets
9 Mar 2021
BETTER FINANCE would like to address digital issues from the point of view of financial consumers:
• Lack of legal certainty: Digitalising finance and enabling new technologies enhance the provision of financial services would benefit both individual investors and the EU economy. However, the positive disruptive potential of these new technologies cannot be fully harnessed if there is no legal certainty for providers and users of these services. Moreover, risks cannot be prevented or addressed in absence of a supervisory and regulatory mechanism. (As for example in the case of crypto currency).
• Regulatory fragmentation: fintech products such as payments, Robo-advisors, wealth management can provide benefits to consumers such as lower costs and accessibility. However, these fintech products may pose other risks for consumers (as privacy concerns and data security) which are not always addressed by existing regulations and laws. In addition, divergences in the regulatory framework could produce regulatory gaps, reducing the level playing field.
• The use of algorithm and Artificial Intelligence (AI) may cause risks to consumers concerning the level of suitability of the investment advice. Our on Robo-advice report shows that several platforms provide investment advice that seems inconsistent with the investor and risk profile of the mystery shoppers. In addition, the strong discrepancy in terms of investment gains and high dispersion of asset allocation for the same investor profile is concerning. Therefore, the EU authorities should consider policy actions to improve these processes, such as developing more detailed guidelines on investor questionnaires, on asset allocations or risk profiles.
• Human control: If on the one hand, the use of algorithm and Artificial Intelligence (AI) and automated decision making (ADM) produce several advantages as increased accuracy, speed and reduced costs, on the other hand the risk associated to these new technologies can create financial and nonfinancial damages to consumers. The use of these technologies in finance without meaningful human control and oversight can trigger significant loss of transparency, accountability and arbitrary discrimination (as in the use of AI and ADM in the insurance). The EU Commission should propose a legislative framework for AI-powered automated decision making (ADM) to ensure that they are fair, transparent and accountable to consumers and they do not harm their fundamental rights.
• Lack of EU regulatory “sandboxes”: only 5 competent authorities in member states have developed regulatory sandboxes and 5 more are under development . The lack of common EU framework and different regulations among member states have impact on the level playing field and the supervision in the field of innovative technologies.
• Non-discriminatory access to data and interoperability. Digitalization is characterized by business models that use data aggregation and analytics, thus becoming the core of innovation. The huge amount of data generated by consumers is a key for these business models to develop products and services. However, the concentration of data in few big market players could be in violation of EU data protection, privacy, consumer law restraining innovation and competition that could be useful for citizens. The EU Commission should complete the regulatory framework for a competitive data economy. Data portability should be at the core of this regulatory framework in which individuals and business should have the possibility to access data but also to provide better protection to individuals on the data that they generate and should clearly own. Therefore, non-discriminatory access to data and interoperability among market players should be considered in the legislative framework.
Read full responseMeeting with Florian Denis (Cabinet of Commissioner Mairead Mcguinness)
8 Mar 2021 · Retail investment/CMU/MiFID II
Meeting with Mairead McGuinness (Commissioner)
17 Feb 2021 · Brexit, Transatlantic Dialogue
Meeting with Mairead McGuinness (Commissioner)
3 Feb 2021 · Capital Markets Union, Retail Investment, Sustainable Finance, Digital Finance.
Response to COM Delegated Regulation specifying the information referred to in art. 65.9 of the PEPP Regulation
18 Dec 2020
Please refer to the attached document for BETTER FINANCE's response.
Read full responseResponse to COM Delegated Regulation specifying the information referred to in art. 40.9 of the PEPP Regulation
18 Dec 2020
Please refer to the document attached for BETTER FINANCE's Response.
Read full responseMeeting with Mairead McGuinness (Commissioner)
2 Dec 2020 · European Capital Markets Union and new green deal.
Meeting with Agnieszka Drzewoska (Cabinet of Commissioner Mairead Mcguinness), Florian Denis (Cabinet of Commissioner Mairead Mcguinness)
9 Nov 2020 · Virtual Meeting - Introductory meeting. Retail financial services, consumer dimension
Response to Sustainable corporate governance
8 Oct 2020
BETTER FINANCE's response is comprised in the attached PDF document.
Read full responseMeeting with Didier Reynders (Commissioner)
25 Sept 2020 · Consumer Agenda
Response to A New Consumer Agenda
6 Aug 2020
1.A new coherent vision of the role of consumers, in particular in the area of the green and digital transitions
In regard to the new challenges derived by digitisation the following measures should be considered:
- Establishing independent savings products data bases which imply standardized Key Information on actual costs, performances, and risks (“garbage in garbage out”).
- Developing independent web comparative tools
- Rethinking mandatory disclosure documents like KIID for online/ smart phone adaptation, for example using drawdowns for more detailed information.
- Enabling individual shareholder engagement within the EU by enabling voting or enabling giving power to a proxy with one’s smartphone.
- Ensuring proper data protection.
Regarding the increasing importance of environmental issues, we suggest considering the following recommendations:
• Developing Ecolabels and standards for different sustainable financial product category for individual investors:
-Allowing sustainable products that represent a reorientation of the capital market into sustainable investments, preventing any form of greenwashing.
-Setting up high-level of standards regarding environmental social and governance aspects.
-Ensuring exemplary compliance with EU investors protection rules.
-Protecting individual investors against non-reliable impact claims, thus preventing impact-washing.
• Developing a regulatory definition of greenwashing for financial products.
2.The role of consumers in the post-crisis economic recovery - Covid-19
in relation to the economic disruption caused by COVID-19, the following measures to enhance consumer protection should be considered:
-Enable employee share ownership programs in the next 24 months including tax reductions.
-End biased advice in “retail” distribution and strongly curb “inducements” in MiFID 2 and in IDD-regulated investment products.
-Enhance financial literacy, not for individual investors to determine the best products for them, but to make sure they can choose the adequate level of advice for them.
-Restore standardised disclosure of past performance (relative to the managers’ benchmarks) and costs for all retail investment products.
-Ensure that the future PEPP, the proposed Pan-European Personal Pension product, is really simple, safe and efficient.
-ESAs to build a publicly available database where pension products can be compared.
-Unbundling rules for mortgages and consumers loans. These needs to be offered separately from Payment Protection Insurance (PPI).
3.Gaps and discriminations in EU consumer rights and in their effective enforcement.
The Proposal for a Directive of the European Parliament and of the Council on representative actions for the protection of the collective interests of consumers, and repealing Directive 2009/22/EC (SWD(2018) 96 final) has a number of detrimental issues for consumers:
A.The scope of the Directive (Article 2.1) discriminates EU citizens who save in directly in shares and bonds vs. “packaged” investment products
B.The “opt-in” system and the cross-border dimension of the opt-out system is detrimental to consumers
C.ADR settlements and recourse to judicial review (Article 5(2)) and the weakening of representative organisations limits consumers’ legal protection
4.Redesigning the structures for stakeholder engagement on the future consumer policy.
As communicated in the EC roadmap a new comprehensive framework for engaging stakeholders in consumer policy formulation and enforcement is needed. In BETTER FINANCE’s opinion the new framework should include stakeholder representing financial consumers in order to address issues and challenges raising in field of EU financial services and provide an adequate response. Individual investors, savers and financial service users are in dire need of effective protection rules and enforcement mechanisms, especially in the context of numerous scandals concerning mis-selling of financial products .
Read full response6 Jul 2020
BETTER FINANCE welcomes the introduction of requirements for firms providing investment advice and portfolio management to ask clients about their non non-financial objectives and preferences. This is an important step forward for the integration of sustainability in the fiduciary duties of financial advisers. However, we recommend some specific amendments in order to avoid:
- greenwashing practices in the “advice” and sale of sustainable financial products,
- misinterpretations of sustainability factors of investments,
- and non-intelligible questions to savers, which is not allowed by MIFID II (requirement of clear and understandable information)
We agree with the duty for investment firms to first address investment objectives, time horizon and individual circumstances of the client, before asking their potential sustainability preferences. However, sustainability preferences should not be seen as secondary information on the fiduciary of the investment firms. Therefore, questions on sustainability preferences should not be a mere tick-the-box assessment. The sustainability assessment should be consistent with the expectations expressed by individual investors and should not, in any case, be used for greenwashing, or to mislead individual investors. In order to be consistent with individual investors’ expectations, the questions related to sustainability preferences should be addressed in plain language and clearly aim at assessing the impact the client intends to pursue with its investment. In particular, if the investment advisor, after asking questions on non-financial preferences to the client, would propose simple negative screening products leading the investor to think that the proposed product would have a positive ESG impact in the real economy, it would be strongly misleading.
In addition, we want to underline that our proposed amendment is in line with the HLEG final report on Financing a Sustainable European Economy on 31 January 2018 as it recommends to "require investment advisers to ask about, and then respond to, retail investors’ preferences about the sustainable impact of their investments, as a routine component of financial advice".
Also, the definitions of what are « sustainable investments” and what are financial instruments that consider “principal adverse impacts on sustainability factors » are not intelligible for the average EU saver. Therefore, they are not compliant with the basic investor information rules of MIFID II which require that information be clear and understandable for the average client. They will also require a very thorough training in ESG matters for investment “advisors” which will take time. Therefore, we believe that the reference and a clearer definition of sustainable impact preferences is essential when referring to questions addressed to individual clients regarding their non-financial objectives, thus preventing any of form mis-selling and greenwashing products. A simpler definition, more likely to be understood both by the “advisor” (if we can use this word for a person that is compensated with sales commission) and the client is proposed in the PDF attached.
Read full responseMeeting with Valdis Dombrovskis (Executive Vice-President) and
28 May 2020 · COVID-19 relief measures
Meeting with Valdis Dombrovskis (Vice-President) and
18 Nov 2019 · Capital Markets Union, Sustainabe Finance
Response to Amendments to the implementing rules on solvency applicable to insurers
7 Dec 2018
BETTER FINANCE Feedback on rules for solvency of insurers (EC Delegated Regulation proposal of 8/11/2018, Article 171a - Long-term equity investments)
Read full responseMeeting with Paulina Dejmek Hack (Cabinet of President Jean-Claude Juncker) and Federation of European Securities Exchanges
5 Dec 2018 · Speech at the International Conference "EU Capital Markets 2024"
Meeting with Olivier Guersent (Director-General Financial Stability, Financial Services and Capital Markets Union)
29 Aug 2018 · CMU, Fintech
Response to Institutional investors' and asset managers' duties regarding sustainability
23 Aug 2018
BETTER FINANCE welcomes this opportunity to comment on the European Commission proposal on the establishment of a framework to facilitate sustainable investment.
EU citizens as savers and individual investors are the main provider of long term funding to the EU economy and are mostly by nature long term oriented, as their needs are often long-term ones: pension, home purchase, children education, etc. Therefore, they are concerned with the impact of the investment of their savings on sustainability.
Please find attached our full feedback on the Commission proposal on the establishment of a framework to facilitate sustainable investment.
Read full responseResponse to Institutional investors' and asset managers' duties regarding sustainability
23 Aug 2018
BETTER FINANCE welcomes this opportunity to comment on the European Commission’s regulation proposal on disclosure relating to sustainable investment and sustainability risks (amending Directive (EU) 2016/2341).
EU citizens as savers and individual investors are the main provider of long term funding to the EU economy and are mostly by nature long term oriented, as their needs are often long-term ones: pension, home purchase, children education, etc. Therefore, they are concerned with the impact of the investment of their savings on sustainability.
Please find attached our full feedback on the Commission Regulation proposal on disclosure relating to sustainable investments and sustainability risk amending directive (EU) 2016/2341.
Read full responseResponse to Institutional investors' and asset managers' duties regarding sustainability
22 Aug 2018
BETTER FINANCE welcomes this opportunity to comment on the Commission proposal on low carbon benchmarks and positive carbon impact benchmarks released as part of the Sustainable Finance Action Plan of the European Commission.
EU citizens as savers and individual investors are the main provider of long term funding to the EU economy and are mostly by nature long term oriented, as their needs are often long-term ones: pension, home purchase, children education, etc. Therefore, they are concerned with the impact of the investment of their savings on sustainability.
Please find attached our full feedback on the Commission proposal amending regulation (EU)2016/1011 on low carbon benchmark and positive carbon impact benchmark.
Read full responseResponse to Multiannual Financial Framework: Internal Market, Competitiveness of SMEs and European Statistics Programme
9 Aug 2018
BETTER FINANCE welcomes this opportunity to comment on the proposal for a regulation establishing the programme for a single market and competitiveness of enterprises (MFF 2021-2027) which will continue to support the specific activities covered by the 2017-2020 Capacity-Building Programme enhancing the involvement of consumers and other financial services end-users in Union policy-making, as set out in Regulation (EU) 2017/826 of the European Parliament and of the Council which continued the pilot programme and preparatory action of the years 2012-2017 .
BETTER FINANCE fully supports Recital 42 pointing out that “The Programme should therefore continue to support the specific activities covered by the 2017-2020 Capacity-Building Programme enhancing the involvement of consumers and other financial services end-users in Union policy-making, as set out in Regulation (EU) 2017/826”.
We regret that the proposal is not more closely linked to the Capital Markets Union Action Plan and in particular the actions regarding consumers of financial services which aim to “provide more options and better returns for savers and investors” to “help retail investors to get a better deal”. The EC places “retail investors at the core of the CMU initiative” but as of July 2018, most of the CMU actions regarding retail investors are yet to be finalized.
Please find attached BETTER FINANCE's full feedback to the Multiannual Financial Framework proposal for Internal market.
Read full responseResponse to Institutional investors' and asset managers' duties regarding sustainability
21 Jun 2018
BETTER FINANCE welcomes this opportunity to comment on the proposal amending Delegated Regulation (EU) 2017/565 supplementing MiFID II as regards organizational requirements and operating conditions for investment firms and defined terms for the purpose of that directive.
Investment firms shall act in accordance with the best interest of their clients. As such, when providing investment advice and portfolio management, they must disclose information on the ESG of each financial product offered to the client before providing investment services.
The asset managers must explain to the client how his or her ESG preferences for each financial instrument is taken into consideration during the advice process.
BETTER FINANCE fully supports this proposal to include ESG considerations during the advisory and product suitability process. However, we have some concerns regarding the proposal.
Firstly, and as raised at several occasions by BETTER FINANCE (BETTER FINANCE’s press release “ BETTER FINANCE welcomes EC roadmap towards a more sustainable economy but once again deplores failure to take the interests of EU citizens as pension savers and individual investors into account” http://betterfinance.eu/fileadmin/user_upload/documents/Press_Releases/en/Other_investors/PR_-_HLEG_Final_Report_-_020218.pdfhttp://betterfinance.eu/fileadmin/user_upload/documents/Press_Releases/en/Other_investors/PR_-_HLEG_Final_Report_-_020218.pdf; BETTER FINANCE’s press release “BETTER FINANCE welcomes the Sustainable Finance Action Plan but warns the Commission against its plans regarding taxonomy, benchmarking and an eco-label” http://betterfinance.eu/fileadmin/user_upload/documents/Press_Releases/en/Other_investors/PR_-_Sustainable_Finance_-_210318.pdf) , before requesting institutional investors and assets managers to include ESG’s client’s preferences in the advice process, we must have an internationally agreed taxonomy in order to determine, for instance, what is “green and what is not”.
The Commission has chosen to follow a sequencing approach by first focusing on climate only. However, the proposed amendment to the MiFID II delegated regulation includes the three components: “E”, “S” and “G”.
Secondly, we believe that the Commission should make a clearer reference between the proposed regulation on disclosures relating to sustainable investments and suitability risks (Proposal COM (2018) 354) 354 and the advisory and product suitability process.
Thirdly, we warn the Commission that the inclusion of ESG considerations/ preferences should not lead providers to comply with the Delegated Regulation just by constructing funds corresponding to the client ESG preferences without addressing ESG consideration for the rest of the portfolio.
Read full responseResponse to Institutional investors' and asset managers' duties regarding sustainability
21 Jun 2018
BETTER FINANCE welcomes this opportunity to comment on the proposal amending Delegated Regulation (EU) 2017/2359 to include the customer’s ESG preferences in the criteria and practical details to be taken into account by insurance intermediaries and insurance undertakings when assessing the suitability of insurance-based investment products for their customers.
Investment firms shall act in accordance with the best interest of their clients and as such, when providing investment advice and portfolio management, they must disclose information on the ESG of each financial product offered to the client before providing investment services.
The asset managers must explain to the client how his or her ESG preferences for each financial instrument is taken into consideration during the advisory and product suitability process.
BETTER FINANCE fully supports this proposal to include ESG considerations during the advisory and product suitability process. However, we have some concerns regarding the proposal.
Firstly, and as raised at several occasions by BETTER FINANCE ( BETTER FINANCE’s press release “ BETTER FINANCE welcomes EC roadmap towards a more sustainable economy but once again deplores failure to take the interests of EU citizens as pension savers and individual investors into account” http://betterfinance.eu/fileadmin/user_upload/documents/Press_Releases/en/Other_investors/PR_-_HLEG_Final_Report_-_020218.pdfhttp://betterfinance.eu/fileadmin/user_upload/documents/Press_Releases/en/Other_investors/PR_-_HLEG_Final_Report_-_020218.pdf; BETTER FINANCE’s press release “BETTER FINANCE welcomes the Sustainable Finance Action Plan but warns the Commission against its plans regarding taxonomy, benchmarking and an eco-label” http://betterfinance.eu/fileadmin/user_upload/documents/Press_Releases/en/Other_investors/PR_-_Sustainable_Finance_-_210318.pdf) , before requesting institutional investors and assets managers to include ESG’s client’s preferences in the advisory and product suitability process, we must have an internationally agreed taxonomy in order to determine, for instance, what is “green and what is not”.
The Commission has chosen to follow a sequencing approach by first focusing on climate only. However, the proposed amendment to the IDD delegated regulation includes the three components: “E”, “S” and “G”.
Secondly, we believe that the Commission should make a clearer reference between the proposed Regulation on disclosures relating to sustainable investments and suitability risks (Proposal COM (2018) 354) 354 and the advisory and product suitability process.
Thirdly, we warn the Commission that the inclusion of ESG considerations/ preferences should not lead providers to comply with the delegated regulation just by constructing funds corresponding to the client ESG preferences without addressing ESG consideration for the rest of the portfolio.
Read full responseResponse to Review of Regulation on cross-border payments
12 Jun 2018
BETTER FINANCE welcomes this opportunity to comment on the European Commission’s proposal amending the Regulation on cross-border payments regarding certain charges on cross-border payments in the Union and currency conversion charges. BETTER FINANCE strongly supports the overall objective of the EC to achieve a single EU market for payments, 61 years after the Treaty of Rome set up the unification process.
Please find enclosed our feedback on the Commission proposal for a review of the Regulation on cross-border payments.
Read full responseResponse to A simplified prospectus for companies and investors in Europe
22 May 2018
BETTER FINANCE welcomes this opportunity to comment on the European Commission’s roadmap on a “Simplified prospectus for companies and investors in Europe”. BETTER FINANCE already had the opportunity to share its position regarding the content of the Prospectus, the EU growth Prospectus and their respective summaries (See BETTER FINANCE’ answer to the Consultation Paper on draft RTS under the new Prospectus Regulation (ESMA) http://betterfinance.eu/fileadmin/user_upload/documents/Position_Papers/Securities_Market/en/BETTER_FINANCE_s_response_consultation_paper_on_draft_rts_under_prospectus_regulation_FINAL.pdf ; See BETTER FINANCE’s answer to the Consultation Paper on EU Growth (ESMA)prospectus http://betterfinance.eu/fileadmin/user_upload/documents/Position_Papers/Securities_Market/en/BETTER_FINANCE_s_Response_form_consultation_paper_on_eu_growth_prospectus__2_FINAL.pdf;
See BETTER FINANCE’s answer to the Consultation Paper on format and content of the prospectus http://betterfinance.eu/fileadmin/user_upload/documents/Position_Papers/Securities_Market/en/BETTER_FINANCE_s_response_consultation_paper_on_format_and_content_of_the_prospectus_1_FINAL.pdf) .
As representative of individual investors and savers, we believe that the main concern is to ensure that the Prospectus, the EU Growth Prospectus and their respective Summary prospectuses must reflect a true picture of the company’s financial health and prospects.
The historical financial information must be clearly presented in the Prospectus Summary (and the Summary of the EU Growth Prospectus) in a standardized and therefore comparable way in order to give to the potential investor a clear view of the financial information to allow him/her to make an informed investment decision.
We believe that the following information must be included in the Summary:
• the total revenue (at least for the last 5 years or since the inception if shorter)
• the Net earnings/losses (at least for the last 5 years or since the inception if shorter)
• the Net earnings per share (undiluted) (at least for the last 5 years or since the inception if shorter)
• Total assets
• Total liabilities
• Shareholders’ equity
• Gross dividend, and
• End of the year closing price of the share on its main market of listing are also important information for investors (at least for the last 5 years or since the inception if shorter)
Read full responseResponse to Directive on cross-border distribution of investment funds
8 May 2018
BETTER FINANCE welcomes this opportunity to comment on the Commission’s proposal amending the AIFM and UCITS directives with regard to cross-border distribution of investment funds.
Firstly, BETTER FINANCE agrees with the proposal to delete articles 77 and 91(3) of the UCITS directive since those articles have been included in the proposal for a Regulation on the facilitation of cross-border distribution of collective investment funds. This amendment proposal will avoid the multiplication and dissemination of legal requirements for market players.
Secondly, the Commission proposes to include a new article detailing the facilities to be performed by an AIFM when it establishes in a Member State where it intends to market units or shares of an AIF to retail investors. BETTER FINANCE supports this article which ensures that the AIFM will provide the retail investor with all information concerning the subscription, the purchase and the redemption orders and his/her rights in the official language of the Member State where the AIF is marketed.
Read full responseResponse to Proposal for a Directive amending Directive 2014/65/EU (MiFID2)
8 May 2018
BETTER FINANCE welcomes this initiative to consult stakeholders on this legislative proposal to amend Directive 2014/65/EU regarding crowdfunding services.
BETTER FINANCE agrees with this proposal: in order to avoid legal uncertainty and the multiplication of legal requirements to crowdfunding platforms, MiFID II should not apply to crowdfunding providers who have been authorized as crowdfunding providers under the ECSP.
However, the basic investor protection rules should be consistent between MIFID II (article 24(3)) and the ECSP Regulation (article 4(2)).
Read full responseResponse to Reducing barriers to cross-border distribution of investment funds
8 May 2018
BETTER FINANCE welcomes this opportunity to comment on the Commission proposal for a Regulation on facilitating cross-border distribution of collective investment funds.
Please find attached BETTER FINANCE's comments on this proposal.
Read full responseResponse to Legislative proposal for an EU framework on crowd and peer to peer finance
8 May 2018
BETTER FINANCE welcomes this initiative to consult stakeholders on this legislative proposal for a regulation on a European Crowdfunding Service Providers (ECSP) for business.
Please find attached the comments by BETTER FINANCE in the attached file.
Read full response8 May 2018
BETTER FINANCE welcomes this opportunity to comment on this draft implementing regulation laying down minimum requirements implementing the Shareholders Rights Directive II as regards, shareholders identification, the transmission of information and the facilitation of the exercise of shareholders rights.
Please find the comments by BETTER FINANCE in the attached file.
Read full responseResponse to Targeted revision of EU consumer law directives
7 May 2018
BETTER FINANCE welcomes and supports this proposal setting a minimum EU-wide framework for collective redress mechanisms across Member States which will be available for financial services users. Like for other sectors, there is indeed a clear need for collective redress scheme for financial services. This proposal is in the interest of EU citizens as retails investors and pension savers since the current EU legislative framework lacks any effective redress mechanism, leaving many consumers unable to exercise their rights.
However, BETTER FINANCE would like to raise concern on the following points:
1. Requirement to obtain a final injunction
As provided in articles 5(2) and 10 of the proposal, the procedure requires claimants to first obtain a final injunction order from a court before the judge decides whether to allow for some form of collective
compensation. This requirement may severely prolong the procedure and increase its cost to the detriment of consumers.
2. Redress measures at the discretion of Member States
BETTER FINANCE regrets that the proposal lacks ambition as regards the effectiveness of the redress tool.
Indeed, as provided in article 6(1) of the proposal, both the form of the representative action and the requirement for an official mandate from each victim (i.e. the choice between the “opt-in” or “opt-out” procedure) are left at the discretion of Member States.
This is all the more unfortunate as it has been already proven that the opt-out system offers victims better protection, especially when they are not aware of their rights and many times even the detriment itself. Furthermore, since the rate of participation in the opt-out system is much higher, many more abused EU financial users would be reached and indemnified.
3. Exclusion of EU citizens/consumers directly investing in capital markets from the collective redress scheme
Even though the proposal represents a significant progress for financial services users, it seems
inconsistent and discriminatory. In fact, on the one hand it offers protection to consumers who invest their
money in capital markets indirectly (in intermediated, “packaged” investment products), but on the other hand it excludes such protection for EU citizens investing directly in the
economy (i.e. individual shareholders), since the Market Abuse Directive and Regulation
provisions are most unfortunately excluded from the EC proposal’s scope.
Consequently, individual investors suffering damage by the issuer, which e.g. has violated ad-hoc disclosure rules, like allegedly VW, still won’t be able to join their claims together and claim collectively across all Member States.
As it stands now, the New Deal will not help regain the badly needed EU investors’ trust and boost their confidence and is quite in contradiction with the Commission’s flagship project – the Capital Markets Union which aims at “fostering investments into capital markets”.
Please find attached our detailed position.
Read full responseResponse to Fitness check on public reporting by companies
8 Mar 2018
BETTER FINANCE welcomes this opportunity to give its view regarding the current legislative framework on the public reporting of companies. As a representative for individual investors and financial services users in Europe, BETTER FINANCE will focus its answer for this feedback on “whether the financial and non-financial disclosure in the area of Environmental, Social and Governance (ESG) reporting by companies are fit for purpose, including as regards sustainability disclosures”?
Common definitions and common criteria for a better public reporting - As a general comment, BETTER FINANCE believes that the current legislative framework regarding the reporting on ESG should be reviewed to introduce more standardisation in the disclosure process. Under the current legislative framework, public reporting of companies on ESG and particularly on social and governmental issues does not reflect the right picture as regard sustainability disclosure. Non-financial reporting EU rules (DIRECTIVE 2014/95/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups; Guidelines (non-binding) on the Non-Financial reporting for companies, 2017/C 215/01) require companies to disclose certain information on the way they operate and manage social and environmental challenges in order to encourage them to develop a responsible approach to business. The NFI directive states (Articles 19 (a) and 29 (a) of the NFI Directive 2014/95/EU) that companies must report a non-financial statement regarding the impact of their activity relating to - among others - environmental and social matters. The directive and the non-binding guidelines leave flexibility to the companies to comply with these rules. BETTER FINANCE believes that this flexibility left to the companies should be accompanied by a standardised framework regarding the reporting obligations.
BETTER FINANCE indicated that companies should apply ESG to their own activities ( See attached BETTER FINANCE’s Press release “SUSTAINABLE FINANCE PRODUCTS MUST FULLY COMPLY WITH CONSUMER PROTECTION RULES AND REALLY CREATE “LONG-TERM AND SUSTAINABLE VALUE” ), especially on governance and transparency. In that regard, our organisation pointed the lack of clear, consistent and mutually agreed definitions regarding ESG. The legislator should ensure that the “sustainable finance” label is not used as a marketing gimmick and come up with common definition and fixed criteria for companies to report on their progress. As a representative of individual investors and savers, we underlined the need for companies to report on social and governance issues.
Social issues - BETTER FINANCE believes that companies should report on their efforts to promote long term sustainable products. As part of its study on Closet indexing and Social Responsible Investments, BETTER FINANCE demonstrated that some investment products labelled as “socially responsible” in reality destroy the real value of their clients’ savings instead of providing “fair and prominent indication of any relevant risks” (Article 44 (2) (b), MiFID II Delegated Regulation COMMISSION DELEGATED REGULATION (EU) 2017/565) and “fair, clear and non-misleading information” (Article 24 (3) MiFID 2014/65) on products labelled as SRI. With common definitions and criteria, companies should be asked to report on their efforts to promote socially responsible products (in their non-financial reporting obligations).
Governance issues - The concept of sustainable finance should translate into products that are exemplary in terms of transparency and investors protection rules in particular with the rules on information and disclosures. In order to properly report on their progress and advances in terms of sustainability, common definitions and common criteria for evaluation should be adopted.
Read full responseMeeting with Elina Melngaile (Cabinet of Vice-President Valdis Dombrovskis)
8 Mar 2018 · Collective Redress
Response to Amendment to Directive (EU) 2016/97 on insurance distribution.
16 Feb 2018
BETTER FINANCE welcomes this opportunity to comment on the proposal to postpone the date of application of the Insurance Distribution Directive.
The Insurance Distribution Directive (IDD) published in the Official Journal of the European Union (OJ) on the 20th January 2016 amends the Insurance Mediation Directive (Directive (EU) 2002/92) with the aim of increasing transparency of price and costs of insurance products.
The new directive introduces a simple, standardized insurance product information document (IPID) which provides clearer information on non-life insurance products, so that consumers can make more informed decisions. The directive entered into force on 23rd of February 2016 and was meant to be transposed by the Member States by 23rd of February 2018.
In September 2017, the European Commission adopted two Delegated Regulations with regard to product oversight and governance requirements for insurance undertakings and insurance distributors (POG regulation) and to information requirements and conducts of business rules applicable to the distribution of Insurance-Based Investment Products (IBIP Regulation).
During the scrutiny period the European Parliament raised that the industry might need more time to implement the technical and organizational changes required to comply with the Delegated Regulations and ask the Commission to adopt a legislative proposal pushing back the date of application to 1st of October 2018.
Firstly, BETTER FINANCE does regret this postponing of the date of application. In our view, the industry had plenty of time since February 2016 to prepare for this new legislative framework which provides for rather low-level/basic minimum standards for the insurance distribution.
Secondly, BETTER FINANCE and its German member Bund der Versicherten (BdV) (See BETTER FINANCE’s post on this http://betterfinance.eu/media/latest-news/news-details/article/insurance-distribution-directive-bund-der-versicherten-and-better-finance-denounce-the-erosion-of/) already denounced the erosion of consumer protection following the publication of the draft delegated acts. Both organizations raised that the Commission had watered down EIOPA’s proposal, e.g. by removing the reference to monetary benefits from the list of minimum criteria that have to be assessed in order to identify conflicts of interests. We underlined that in countries where commissions are crucial for distribution activities this omission may facilitate further mis-selling of financial products since distributors receiving disproportionately high commissions would not be inclined to act in the consumer’s interest.
Finally, as of now, the Directive has only been partially transposed by one country (Belgium). None of the other 27 Member States have communicated their transposition measures to the European Commission (See the Transposition status of the IDD on the European Commission’s website https://ec.europa.eu/info/publications/insurance-distribution-directive-transposition-status_en). Nevertheless, both BETTER FINANCE and BdV would like to point out that postponing the date of application of the Insurance Distribution Directive could lead to legal uncertainty for the Member States who would have transposed the directive before 23rd of February 2018. For instance, if after 23rd of February in a Member State that has transposed the directive in time, an insurance provider does not correctly determine the target market as provided in the Product Oversight and Governance Delegated Regulation (Delegated Regulation (EU) 2017/2358 of 21 September 2017 with regard to product oversight and governance requirements for insurance undertakings and insurance distributors), it will constitute a case of mis-selling. However, the legal consequences for the provider and his clients would be unclear since the Directive and Delegated Regulation would be in fact not yet applicable.
Read full responseResponse to EBA relocation
29 Jan 2018
BETTER FINANCE welcomes this opportunity to comment on the relocation of the European Banking Authority (EBA).
Following the United Kingdom’s decision to leave the European Union by 30th March 2019, the General Affairs Council selected Paris as the new seat for the EBA.
Currently, EBA is almost entirely focused on regulatory issues, not on supervisory ones. More concerning for EU citizens as users of banking services, EBA has been very little active on retail user protection, even not fulfilling its legal mandate:
- it did not issue any "consumer trends" report in 2017, despite its legal requirement to collect, analyze, and report on consumer trends;
- It did not play its legally required leading role in promoting transparency in the critical area of past performance and fees of bank savings products: it has never measured the former or the latter;
- It has not played so far, its legally required coordinating role in financial education (first financial education initiative planned for 2018);
- It has not played its legally required leading role in promoting simplicity for consumer financial products.
The relocation process could be used an opportunity, along with the on-going European Supervisory Authorities’ (ESAs) reform, to address the lack of sufficient “consumer’s protection” focus of the EBA. In particular, it could be seen as an opportunity to transfer conduct of business supervision from EBA to the European Securities and Markets Authority (ESMA).
As underlined by BETTER FINANCE in its press release (“ A twin-peaks approach to the European system of financial supervision: turning consumer protection into a real priority” http://betterfinance.eu/media/press-releases/press-release-details/browse/1/article/a-twin-peaks-approach-to-the-european-system-of-financial-supervision-turning-consumer-protection-i/ ), the “silo approach” has proven to be deficient in particular in terms of effective consumer protection. There is no compelling rationale for not having, as a long term goal, a single public supervisor for business of conduct for all financial products sold to EU citizens and adopting a ‘Twin Peaks’ approach to EU financial supervision, separating prudential supervision from conduct of business and client protection supervision.
In the medium term in order to alleviate the lack of consumer protection focus, it will be crucial to at least:
- Avoid conflicting supervisory objectives by clearly separating the Conduct of Business supervision (CoB) from the prudential mandate within the EBA. There should be a separate governance for CoB along with a separate and adequate budget.
- Achieve supervisory convergence with a strong mandate for consumer protection. In this respect, binding standards on CoB supervision should be developed (minimum mandate powers, tasks and resources of national competent authorities). Based on those standards, the enforcement activities should be coordinated with the national authorities and the outcomes of those coordinated activities should be made public. Supervisory convergence must take through direct supervisory and product intervention powers with regard to cross-border and pan-EU issues as well as market monitoring and data collection.
Read full responseResponse to Review of the European Supervisory Authorities
29 Jan 2018
BETTER FINANCE (BF) welcomes the opportunity to comment on the EC’s proposal on the review of the European Supervisory Authorities (ESAs). BF supports initiatives aiming at improving supervisory convergence as well as enhancing efficiency of handling data relevant aspects of the MiFID II framework. However, transferring the powers to authorise and supervise data reporting service providers (DRSPs) from national competent authorities (NCAs) to the European Securities and Markets Authority (ESMA) should allow for the knowledge and understanding of the local markets to be sufficiently involved in the decision making process. Similarly, BF agrees that divergence in the supervision and approval of internal models for Solvency Capital Requirement (SCR) leads to inconsistencies and can create both an uneven level playing field for market participants, and an inconsistent protection of EU citizens as insured persons. Actually, BETTER FINANCE believes that the use of “internal models” is an advantage given to the larger insurance institutions over smaller ones, and even more importantly is a barrier to a fair, clear and not misleading information to the customers, as it is almost impossible for them to evaluate those “internal models”. This is why the use of these highly non transparent and unclear (in the sense of consumer protection rules) “internal models” should be restricted as much as possible.
Therefore, promoting supervisory convergence by enhancing EIOPA’s role as far as internal models are concerned should lead to streamlined application processes and requirements across the EU. However, also here it should be ensured that the knowledge and understanding of the local markets to be sufficiently involved in the decision making process Moreover, BETTER FINANCE underlines that proposed reform of ESAs lacks ambition with regard to consumer and investor protection and fails to give the ESAs teeth with which to enforce EU Law.
Low level of individual user protection: The proposal fails to address aspects crucial to the effective protection of financial services end-users such as (1) at least ring-fencing the user protection objective from the prudential one within the existing ESAs and (2) having a strong mandate and the necessary resources with regard to risky or toxic products sold to EU citizens. Additionally, even if it grants ESMA some direct supervisory powers, it refers mostly to non- user related areas.
Weak public enforcement: BETTER FINANCE has been pointing out for some time now (below the list of its positions and briefing papers) that, in terms of public enforcement, there is room for improvement especially as far as the scope and governance of the ESAs are concerned as well as effective supervision. We have underlined that it is high time for ESAs to finally get and use their product intervention powers to protect consumers.
Moreover, BF is very concerned the EC empowers the industry to challenge the ESAs guidelines and recommendations more easily and reserves itself the right to withdraw guidelines issued by the ESAs if, for instance, a majority of two thirds of the ESAs’ Stakeholder Groups asks for it. This approach is undemocratic, as the ESAs stakeholder groups are dominated by financial industry representatives and members who are economically dependent of the industry. It will therefore be quite easy for them to get such a majority. Therefore, BF with other user-side organisations in an open letter sent to the EC and EP proposed recommendations for a reform of the ESAs that would truly deliver for consumers (letter attached).
http://betterfinance.eu/fileadmin/user_upload/documents/Research_Reports/en/Misselling_of_Financial_Products_in_the_EU_-_Briefing_Paper_2017.pdf
http://betterfinance.eu/fileadmin/user_upload/documents/Position_Papers/Financial_Supervision/en/PP_-_Response_CONSULTATION_ON_THE_OPERATIONS_OF_THE_EUROPEAN_SUPERVISORY_AUTHORITIES_160517.pdf
Read full responseResponse to Institutional investors' and asset managers' duties regarding sustainability
11 Dec 2017
BETTER FINANCE welcomes this impact assessment aiming at ensuring that material sustainability factors are consistently taken into account and disclosed by institutional investors and asset managers. BETTER FINANCE agrees with the European Commission on the fact that increasing the transparency of the integration of sustainability in the investment process of asset managers and institutional investors will lead to reduced search costs for end-investors.
In order to effectively contribute to the strengthening of the Capital Market Union, BETTER FINANCE believes that sustainable investment products require binding standards ensuring the trust of EU citizens in sustainable retail investment products and positive returns.
1. Build trust in sustainable retail investment products
BETTER FINANCE already highlighted that sustainable finance products must win and retain the trust of EU citizens, since they represent the main source of long-term funding for the EU economy. Also, the EC consumer scoreboards repeatedly rank pensions and investments as one of the worst consumer markets in the EU.
However, as pointed out by BETTER FINANCE (see our press release http://betterfinance.eu/fileadmin/user_upload/documents/Press_Releases/en/Other_investors/PR_-_SUSTAINABLE_FINANCE__-_2017_0714_01.pdf), regrettably the Interim Report released by the High-Level Expert Group (HLEG) on sustainable finance last July does not even mention savers and individual investors. The EU must include EU citizens as long-term and pension savers in the policy making on sustainable finance. Ensuring the transparency and disclosure of material sustainability factors as well as long term sustainability in the investment process would help regaining EU citizens and investors’ trust.
For EU citizens sustainable finance should translate into products that are the most compliant with EU rules on fair, clear and not misleading information. This compliance should constitute a key requisite for granting any ESG or SRI label. However, BETTER FINANCE’s research on Closet indexing (see our press release on http://betterfinance.eu/fileadmin/user_upload/documents/Press_Releases/en/Other_investors/PR_-_SUSTAINABLE_FINANCE__-_2017_0714_01.pdf) revealed that some products labelled as “sustainable” do not comply with EU investors protection rules.
BETTER FINANCE has for instance drawn attention to the example of the French Government’s SRI Fund Label Committee who granted this label to funds which are not complying with the MiFID information disclosure rules (Article 24, MiFID II Directive 2014/65/EU on Markets in Financial instruments):
• They are claiming to be actively managed and diverging from mainstream by using ESG criteria when they have actually only been “hugging” their mainstream benchmarks before fees.
• They are advertising an objective of over performing a mainstream benchmark using ESG when, in the past 10 years, they have not been able to achieve even half of their benchmark performance and have not even caught up with inflation over that period. And this without issuing any information or warning to fund investors about this repeated failure to meet stated objectives.
2. Ensure “Long-term and sustainable value creation”
BETTER FINANCE has been campaigning for setting standards that would ensure “long-term and sustainable value creation”: those standards should ensure the highest probability of providing decent real returns to EU citizens as savers and current or future pensioners over the long-term. “Decent” returns are returns that at the very least do not destroy the real value of their lifetime’s savings. To this end, such returns (after charges and inflation) must be positive over the long term and sufficiently high to ensure an adequate pension replacement income.
Read full responseResponse to Review of the European Supervisory Authorities
8 Dec 2017
BETTER FINANCE (BF) welcomes the opportunity to comment on the Commission’s proposed amendment in the wider context of the review of the European Supervisory Authorities (ESAs).
As regards the procedures and authorities involved for the authorization of CCPs (central counterparties) and requirements for the recognition of third-country CCPs, BF confirms its support for introducing a more pan-European approach to the supervision of EU and third countries CCPs which lead to further supervisory convergence, stronger and more effective cooperation between the supervisors and foster financial stability and competition.
BF supports strengthening European Securities and Markets Authority’s (ESMA) ability to promote convergence with the supervision of the CCPs with a “CCP Executive Session” composed of permanent and CCP-specific members.
However, BF would like to ask the Commission to specify what tasks does it refer to while mentioning “Article 29a of this Regulation” in its proposed amendment.
Moreover, BF underlines that the proposed reform of ESAs lacks ambition as regards consumer and investor protection and misses the opportunity to give the ESAs teeth with which to enforce EU Law.
Low level of individual user protection
The proposal fails to address aspects crucial to the effective protection of financial services end-users such as:
• creating a separate investor and consumer protection agency that would focus on defending consumer interests in the financial sectors, or at least ring-fencing the investor and consumer protection objective from the prudential one within the existing ESAs
• and having a strong mandate and the necessary resources with regard to risky or toxic products sold to EU citizens.
Additionally, even if it grants ESMA some direct supervisory powers, it refers mostly to non- user related areas.
Weak public enforcement
BF has been pointing out for some time now (please find below the list of BF’s position and briefing papers) that, in terms of public enforcement, there is room for improvement especially as far as the scope and governance of the ESAs are concerned as well as effective supervision. We have underlined that it is high time for ESAs to finally get and use their product intervention powers to protect consumers.
Moreover, BF is concerned that the EC empowers the industry to challenge the ESAs guidelines and recommendations more easily and reserves itself the right to withdraw guidelines issued by the ESAs if, for instance, a majority of two thirds of the ESAs’ Stakeholder Groups asks for it. This approach is un-democratic, as the ESAs stakeholder groups are dominated by financial industry representatives and members who are economically dependent of the industry. It will thus be quite easy for them to get such a majority.
Therefore, in an open letter (attached) to the European Commission and European Parliament BETTER FINANCE with other user-side organisations proposed recommendations for a reform of the ESAs that would truly deliver for consumers and trusts the co-legislators will take them into consideration.
Links to BF’s documents:
Mis-selling of Financial Products in the EU - Briefing Paper 2017 http://betterfinance.eu/fileadmin/user_upload/documents/Research_Reports/en/Misselling_of_Financial_Products_in_the_EU_-_Briefing_Paper_2017.pdf
Press Release: A Twin-Peaks Approach to the European System of Financial Supervision: Turning Consumer Protection Into a Real Priority http://betterfinance.eu/media/press-releases/press-release-details/browse/1/article/a-twin-peaks-approach-to-the-european-system-of-financial-supervision-turning-consumer-protection-i/
BF Response to CONSULTATION ON THE OPERATIONS OF THE EUROPEAN SUPERVISORY AUTHORITIES http://betterfinance.eu/fileadmin/user_upload/documents/Position_Papers/Financial_Supervision/en/PP_-_Response_CONSULTATION_ON_THE_OPERATIONS_OF_THE_EUROPEAN_SUPERVISORY_AUTHORITIES_160517.pdf
Read full responseResponse to A New Deal for Consumers – revision of the Injunctions Directive
28 Nov 2017
BETTER FINANCE (BF) welcomes the opportunity to comment on the Inception Impact Assessment on the revision of the Injunctions Directive. We strongly support option 4 which would provide for a targeted revision of the Injunction Directive and introduce further procedural efficiencies and redress opportunities in mass harm situations.
BF believes that the Option 4 would be truly revolutionary for savers, individual investors and consumers under the below mentioned conditions. Please see our position in attachment.
Read full responseResponse to Legislative proposal for an EU framework on crowd and peer to peer finance
27 Nov 2017
BETTER FINANCE welcomes the initiative from the European Commission to consult stakeholders on a legislative proposal for an EU framework on crowd and peer to peer finance. BETTER FINANCE already raised the issue that only a limited number of the larger SMEs are likely to benefit from Capital Markets Union. As part of the 2015 CMU action plan, this initiative would broaden the access to finance for SMEs. Crowdfunding and peer to peer lending would thus represent an alternative source of financing for small SMEs.
BETTER FINANCE understands that the focus must be on the broadening of financing for SMEs. However, this initiative should not overlook investors’ protection. In this impact assessment, the European Commission stressed that “with appropriate safeguards and investor protection measures, the scaling-up of crowdfunding across the Single Market can be facilitated so that it becomes a more important source of market-based financing in support of job creation and growth”. BETTER FINANCE is thus expecting that EU legislators will find the right balance between the protection of financial services users and the promotion of crowd and peer to peer lending. The initiative from the EC could pave the way towards a harmonized regulatory framework at EU level which could ensure a consistent protection of financial services users.
BETTER FINANCE agrees that a future regulatory framework should include provisions with regards to FinTech to put in place better financial services for consumers. BETTER FINANCE already pointed out the benefits of FinTech for consumers but also the need to adapt the current legislative framework in Financial Services (See our Report on Robo-investing http://betterfinance.eu/fileadmin/user_upload/documents/Research_Reports/en/Robo_Investing_Report_07 . BETTER FINANCE believes that, as a key part of FinTech, crowdfunding should be subject to a binding but proportionate regulatory framework to protect consumers.
As part of its Inception Impact Assessment, the European Commission submits 4 general policy options.
• Option 2- Building on reputational capital- a self-regulatory approach with minimum EU standards: BETTER FINANCE believes that, to ensure maximum protection for investors and trust, the regulatory framework should be binding to ensure a full harmonization and implementation of the legislation. A harmonized and binding framework would also facilitate cross-border operations and would enhance investors’ confidence in SMEs (which would result in more capital raised). BETTER FINANCE believes that this option is not appropriate.
• Option 3- A comprehensive EU approach- treating crowdfunding platforms like regulated trading venues or payment institution: as raised above, BETTER FINANCE believes that a comprehensive EU regulatory framework would be the best solution. Both SMEs and investors would benefit from a harmonized legislative framework. Investors would benefit from protection against financial risks since they are often not or not sufficiently equipped to assess them. SMEs would benefit from a harmonized framework: on the one hand they would act on a level playing field, and on the other, it would increase and secure cross-borders operations and, lastly, they would act in a secure legal environment (costs, jurisdictional procedures…). BETTER FINANCE believes that this option is the most appropriate.
• Option 4- The cross-border solution- a standalone opt-in EU framework: BETTER FINANCE believes that this option would not secure a level playing field for SMEs and would not ensure investor protection. Indeed, it would create a legal patchwork bringing about legal insecurity for investors and SMEs in cross-border operations. Those national platforms could benefit from more favorable rules compared to cross-border platforms. BETTER FINANCE believes that this option is not an appropriate solution to ensure harmonized protection for investors in cross-borders operations.
Read full responseResponse to Fitness Check of supervisory reporting requirements
14 Nov 2017
BETTER FINANCE welcomes the Commission’s fitness check of the EU supervisory reporting requirements in the financial sector.
Reducing the burden of supervisory reporting requirements must not happen at the expense of financial services users:
As mentioned in the Fitness check, reporting requirements are perceived as costly and burdensome, entailing negative impact on the quality of the data.
The EC’s goal to assess whether the supervisory reporting requirements are “fit for purpose” appears to be a good initiative. However, BETTER FINANCE would like to stress that reducing the burden of supervisory reporting requirements should not happen at the expense of financial services users and individual investors. For instance, requirements on the access to information on past performance should not be lowered. For years now, different research studies and reports (See BETTER FINANCE PENSIONS REPORT 2017 http://betterfinance.eu/fileadmin/user_upload/documents/Research_Reports/en/Pension_Report_2017_-_Full_Report_-_Online_Version.pdf ; See BETTER FINANCE’s Briefing paper on Mis-selling of Financial Products http://betterfinance.eu/fileadmin/user_upload/documents/Research_Reports/en/Misselling_of_Financial_Products_in_the_EU_-_Briefing_Paper_2017.pdf ) by BETTER FINANCE have far too often come to the same conclusion: EU citizens as savers and investors are left in the dark with respect to the past performance and costs of the financial products they invest in, meaning that, more often than not, savers and investors are not even able to find out whether a product has ever made or lost money.
BETTER FINANCE has already stressed (See BETTER FINANCE ‘s Press release “ A twin-peaks approach to the European System of Financial Supervision: turning consumer protection onto a real priority” http://betterfinance.eu/fileadmin/user_upload/documents/Press_Releases/en/Financial_services_users/PR_-European_System_of_Financial_Supervision_Review_-_Twin_Peaks_-_220517.pdf) that ESAs have failed to make use of the powers granted to them regarding the obligation to collect, analyze and report on consumer trends and market developments with regard to the performance and fees of retail financial products.
BETTER FINANCE has already warned the EBA that there was no improvement in transparency provided by national banking supervisors in the EU regarding the banks they supervise and this transparence has actually decreased in some Member States (Estonia, France, Luxembourg and Czech Republic).
The elimination of the funds’ KIID, the reporting requirements of 10 years past performance of investment funds and of their benchmark are extremely damaging for EU savers. As raised by BETTER FINANCE (http://betterfinance.eu/fileadmin/user_upload/documents/Press_Releases/en/PR_-_ESAS_FINALLY_ASKED_TO_REPORT_ON_THE_COST_AND_PAST_PERFORMANCE_OF_LONG-TERM_SAVINGS_PRODUCTS_-_201017.pdf) , this is all the more confusing since supervisory authorities have been recently asked by the European Commission (https://ec.europa.eu/info/business-economy-euro/growth-and-investment/capital-markets-union/capital-markets-union-action-plan/fostering-retail-investment_en#actions-introduced-in-the-mid-term-review-of-june-2017) to enhance the transparency of past performances of investment products by inter alia using the KIID data.
Read full responseResponse to Further amendments to the European Market Infrastructure Regulation (EMIR)
30 Oct 2017
BETTER FINANCE, the European Federation of Investors and Financial Services Users, welcomes the opportunity to comment on the Commission’s proposed regulation as regards the procedures and authorities involved for the authorization of CCPs (central counterparties) and requirements for the recognition of third-country CCPs.
BETTER FINANCE supports the main elements of this proposal introducing a more pan-European approach to the supervision of EU and third countries CCPs which would enhance the oversight of the Union and third countries CCPs, lead to further supervisory convergence, to stronger and more effective cooperation between the supervisors, and to foster financial stability and competition.
The review of this framework is all the more important since CCPs have progressively expanded following the G20 commitment to increase the transparency of derivative contracts traded over-the-counter (OTC) by imposing an obligation to centrally clear liquid and standardized contracts via CCPs. As such the proposal of the Commission entails closer cooperation between supervisory authorities and central banks.
BETTER FINANCE believes it is important that euro-denominated capital markets are supervised by the EU authorities in order to protect the interest of EU households as financial services users, savers, investors, borrowers, insured people and pension participants.
Derivatives, even though they are often not directly used by retail financial users, they are impacting heavily the products and services they use such as investments, pension funds and borrowings, especially when they are euro-denominated, included or are linked to euro-denominated indices, benchmarks or currencies. That is why enhancing the reviewing of the CCPs supervisory framework is of significance for retail investors and other financial services users. This proposal aims to enhance EU authorities’ supervisory role. It would strengthen ESMA’s ability to promote convergence with the supervision of the CCPs with a “CCP executive session” within the Board of supervisors of ESMA to supervise Union and third countries CCPs. This “CCP Executive Session” will include members from the European Commission, the European Central Bank (ECB) and representatives of the National Competent Authorities (NCAs) where the CCP is established. The role of the ECB will be strengthened with this permanent membership within the CCP Executive Session
.
ESMA’s supervisory powers will be strengthened regarding access to information, general investigations, on-site inspections and powers in case of infringements. The role of ESMA will also be enhanced to effectively supervise third-country CCPs that apply for recognition to provide clearing services in the Union.
BETTER FINANCE welcomes this proposal which reinforce ESMA and ECB‘s roles in the supervisory structure of the CCPs. We also support the location policy of the European Commission. However, more supervision from EU authorities must not be exercised to the detriment of the principles of proportionality and subsidiarity. Given their proximity with the market players, it is crucial that NCAs have an important role to play in the supervisory scheme of the CCPs. Similarly, it has to be ensured that individual investors, who are still market participants (even if to a lesser extent than before MiFID I which has dramatically reduced the share of regulated markets in listed securities transactions), don’t suffer any ill effect from the outcome of this debate.
Moreover, BETTER FINANCE warns that increasing the supervisory system and this location policy may restrict the choice of the clearing venues which could lead to a geographic concentration. In turn such a concentration could generate price increases for financial services users.
Read full responseResponse to Proposal for a Regulation - Financial Stability, Financial Services and Capital Markets Union
26 Sept 2017
PEPP: a must for future EU pensioners and the EU economy
With a global pensions gap estimated at $ 70 trillion and forecasted to jump to $ 400 trillion by 2050, a simple, cost effective, performing and open pan-European personal pension is an absolute must. Therefore, BETTER FINANCE (BF), the European Federation of Investors and Financial Services Users, welcomes this initiative and the opportunity to comment on the Proposal for a pan-European Personal Pension Product (PEPP).
The advice to save early and amply – given by the financial industry and Public Agencies as the solution – misses a crucial prerequisite for pension adequacy: returns. Unfortunately, BF research demonstrates that real net pension returns have too often been negative (http://betterfinance.eu/fileadmin/user_upload/documents/Research_Reports/en/Pension_report_2016_For_Web_-_Final.pdf).
Simple example (assuming no inflation, saving 10% of income for 30 years, 25-year life expectancy at retirement):
- with zero annual net real return: 12% replacement income only;
- with 8% annual net real return: 49 % replacement income.
Clearly, saving early and significantly does not work without decent long term net real returns. Independent research clearly identifies the key pre-requisites to get these crucially needed long-term returns: overall fees must be kept low and allocation to diversified equities must be strongly favoured. The future PEPP must fill these two over-arching conditions.
PEPP is also the single best solution among all CMU initiatives and elsewhere to initiate a much needed “re-equitization” of the EU economy. PEPP indeed is the best tool to foster retail equity investments: it is very long term, hopefully as tax incentivised as existing national personal pension products, and allows for diversification and protection via the safe and simple default investment option.
Concerns
We agree with the EC that the PEPP should be simple, standardised, cost-effective and open to various types of providers and support reinforcing investor protection rules, with the Key Information Document re-introducing some historical performance disclosure.
However, we do have two major concerns:
• The current design of the default investment option does not protect the long-term purchasing power of pension savings at all. A nominal long-term capital “protection” is not a real one and thus highly misleading for EU citizens who are subject to the “monetary illusion” (even with an average inflation as low as 2% it would destroy 55% of the value of such pension savings over 40 years). This certainly does not result “in a safe investment strategy” referred to in Article 37. The default option should provide a minimum guarantee not to lose the purchasing power of pension savings at retirement. Some providers complain this is impossible to offer, although long inflation-linked bonds already do precisely that, and French banks even provide this guarantee to a short-term savings product (a highly popular “livret A”). This option should be safe and simple enough to be subscribed without advice, and intermediaries should put in writing why they advise their clients against this option. Additionally, for this option, a fee cap could be considered, at least at the beginning.
• The alternative investment options seem to exclude direct equity investments. This is not consistent with the CMU initiative, which aims at strengthening the link between savings and the real economy. This exclusion will again confine EU PEPP savings to fee-laden “packaged” products only. This is all the more unfortunate since the very long-term nature of the PEPP makes it the ideal candidate for retail equity investments.
Last, but not least, EU Member States should thoroughly follow the EC “recommendation” and not discriminate PEPPs versus existing national pension products, even though they frequently suffer from the “NIH” (“Not Invented Here”) syndrome.
Read full responseResponse to DA on conduct of business rules for the distribution of insurance-based investment products
17 Aug 2017
BETTER FINANCE, the European Federation of Investors and Financial Services Users, welcomes this initiative and the opportunity to comment on the Delegated Act on conduct of business rules for the distribution of insurance-based investment products.
Retail” financial services are still ranked as the worst consumer markets in the entire European Union according to the European Commission’s Consumer Scoreboard. Therefore, our organization would like to express its support for initiatives such as the draft Delegated Act since it aims to enhance the protection of consumers and retail investors. We also subscribe to the European Commission’s assessment that insurance-based investment products are often sold as alternatives or substitutes to retail investment products. However, due to many cases of mis-selling of financial products, BETTER FINANCE is concerned that this draft DA diverges to much from EIOPA’s Technical Advice (1st February 2017) and that it seems to set the bar on consumer protection lower than EIOPA’s TA.
In our briefing paper from 04/17 (attached) we pointed out that there was still ample room for improvements in the enforcement and supervision of EU rules, since several key EU regulatory provisions regarding retail investor, saver and mortgage borrower protection are in our view not adequately enforced. We also underlined that this situation is especially worrisome in the case of the key EU provisions related to information disclosure and the prevention of conflicts of interest in the distribution (“inducements”) of retail financial services.
Therefore, we strongly disagree with removing the reference to monetary benefits (e.g. inducements) in Article 3 (2) from the list of minimum criteria that have to be assessed in order to identify conflicts of interests (cf. EIOPA’s TA of 1 February 2017, page 37, point 2c as well page 38, point 7). The reasons for this omission are not sufficiently convincing: even if there are different treatments of inducements in IDD and MiFID2, these divergences do not justify the complete omission from the list. In countries where commissions are crucial for distribution activities this omission may facilitate further mis-selling of financial products since distributors receiving disproportionately high commissions will not be inclined to act in the consumer’s interest.
Furthermore, in Article 8 (2) the non-exhaustive list of criteria to assess the detrimental impact of inducements has been changed, leaving now too broad discretion to market participants (cf. TA page 48, point 5); e.g.: whereas EIOPA proposed as one of the criteria “the fair treatment of customers” (page 48, point 5 b), the Commission’s draft merely refers to “customer satisfaction” which is less strict and leaves more room for interpretation.
Moreover, we support EIOPA’s stance on the criteria for non-complex insurance-based investment products, namely that it is crucial to include a guaranteed minimum surrender value for the classification as non-complex IBIP in Art.16 (cf. TA page 77, letter a). Naturally, the exclusion of the guaranteed minimum surrender value makes it much easier for insurers to classify an IBIP as a non-complex product since there are many IBIPs that concede a guarantee on returns of gross premiums only if maturity is reached. However, this guarantee does not ensure adequate advice and, thus, does not prevent the mis-selling of financial products.
An IBIP contract including only a guaranteed minimum maturity value is mis-leading for customers as many contracts do not reach maturity due to poor advice. One can hope that Article 8 (2e) of the Commission’s draft will prevent this kind of consumer detriment, but still there is no evidence that this provision is actually effective. Therefore, we propose to either include the guaranteed minimum surrender value as a necessary criterion for non-complex insurance-based products, or to delete Article 16a and recital 13 altogether from the draft.
Read full responseResponse to DA on product oversight and governance requirements for insurance undertakings and insurance distributors
16 Aug 2017
BETTER FINANCE, the European Federation of Investors and Financial Services Users, welcomes this initiative and thanks the European Commission for the opportunity to comment on the Delegated Act on product oversight and governance requirements for insurance undertakings and insurance distributors.
Our organization fully defends that this draft Delegated Act would be the cornerstone to establish the main obligations for insurance manufacturers and insurance distributors regarding the product approval process, the target markets, the product testing, the monitoring and review, and the information obligations between manufacturers and distributors. These innovations are fundamental to ensure improvements in terms of consumer protection and retail investor involvement in insurance markets.
Nevertheless, there is one issue that raises our concern as it may not provide adequate consumer protection. Namely, according to the draft DA manufacturers “may” identify groups of customers for whom the insurance product is generally not compatible with their needs, characteristics and objectives. Unfortunately, in our opinion this would lead to watering down consumer protection when compared to the EC draft DA on POG - Article 5 (2) with EIOPA’s Technical Advice (1 February 2017), p. 28, no. 15 - which stipulates that manufacturers “shall” identify groups of customers for whom the product is generally not compatible.
Due to this modification manufacturers would no longer be obliged to identify a negative target market as they would merely have a right to identify such a market. BETTER FINANCE believes that this would result in a major setback with regard to the Commission’s efforts to provide effective consumer protection. Therefore, we urge the European Commission to redraft this section based on the original EIOPA proposal.
Should the draft DA remain unchanged, it could significantly reduce the consumer protection level as well as thwart a convergent application by market participants.
Read full response17 Jul 2017
BETTER FINANCE supports the idea of moving trading from OTC markets to regulated trading venues, and of the differentiation between bilateral and multilateral trading activities in order to protect the price formation process on transparent regulated venues and be able to have a real level playing field.
Our organization understood that, under MiFID II, all trading activities – including today’s Broker Crossing Networks (BCNs) – should be taking place on RMs, MTFs (or OTFs for non-equities) for multilateral trading, or as SIs for bilateral trading. This proves that a distinction is required between bilateral and multilateral.
SIs can be said to trade on their own risk unlike the operators on regulated markets, MTFs and OTFs. This does not necessarily mean that SIs could be considered to be trading venues under certain circumstances, such as in the case of crossing, back-to-back riskless trading and matched principal trading (MPT), which can take place within a single SI (“internally”) or across connected multiple SIs (“externally”).
BETTER FINANCE believes that such an activity contradicts the spirit of MiFID II, and will potentially weaken the intended reform, and therefore the transparency rules and retail investor protection. This mechanism would potentially increment the current levels of fragmentation and opacity by, for example, allowing market participants to bypass the shares trading mandate and – therefore – to blur the SI regime to accommodate OTC market structures.
Our organization was supportive of the clarification made by the EC Delegated Regulation (EU) 2017/565 aimed at limiting the level to which SIs can deploy MPT to enable multilateral crossing within a single SI. Nevertheless, BETTER FINANCE is concerned about the fact that these rules might be turned around by brokers so that they can replicate current BCNs. Fundamentally, these structures could function in the same way as multilateral trading venues, and benefit of only having to comply with a fraction of the transparency requirements since SIs are only requited to be transparent pre-trade up to standard market size. This situation would provide a semblance of reform whilst in reality only perpetuating the status quo.
Our organization defends a regulatory functional approach through which businesses that are alike should be subject to similar rules. In case this loophole is closed, the functional approach would no longer hold water but – more importantly – incentives for multilateral trading, whether on regulated markets, MTFs or OTFs, would be reduced.
Due to all the reasons mentioned above, BETTER FINANCE strongly supports the proposed draft Commission Delegated Regulation. We believe that Article 16a is relevant in order to deal with the “internal” riskless trading – on a single SI – and the “external” riskless trading – across multiple SIs, regardless of whether such an activity is pre-arranged via interconnected networks or more informal (such as via “pinging”). Simultaneously, genuine activities, such as portfolio trades or swaps/CFD trades, will not be included in the proposed changes. We consider that the proposed Delegated Regulation will shut the potential gap regarding the SI regime and the differences between bilateral and multilateral trading, and it will also ensure that market developments in this area are aligned with the original aims of the legislation.
We would also like highlight for the Commission another potential loophole in respect of the SI regime, namely tick sizes. The capacity of SIs to improve prices without respecting tick sizes means they will be able to offer (often meaningless) price improvement to their clients. In conjunction with best execution requirements, this means SIs are extremely likely to capture significant trading flows in the post-MIFID II market structure. This unlevel playing field is not justifiable; SIs should be subject to the same obligations as trading venues in this respect.
Read full responseMeeting with Valdis Dombrovskis (Vice-President)
12 Dec 2016 · CMU; Better Finance; FSUG
Meeting with Jonathan Hill (Commissioner)
25 Sept 2015 · Capital Markets Union
Meeting with Nathalie De Basaldua Lemarchand (Cabinet of Commissioner Jonathan Hill)
28 Apr 2015 · Capital Markets Union
Meeting with Denzil Davidson (Cabinet of Commissioner Jonathan Hill)
13 Feb 2015 · Financial Services Policy
Meeting with Daniel Braun (Cabinet of Commissioner Věra Jourová)
3 Feb 2015 · Corporate governance