ESBG welcomed the intentions of the EC and DG FISMS to assess how the retail investor protection framework may be enhanced through this specific methodology, nevertheless, we believe that it should be made clear that this approach cannot work as one-size-fits-all under the entire product governance requirements. By the same logic, we wanted to stress that existing tools already provide for a “Value for Money” approach.

Therefore, we answered to the discussion note questions and we sent our position to DG FISMA with the aim of explaining why this approach should mainly focus on products distributed under investment advice, if at all. In order to prevent a distortion of the competition between manufacturers, the concept will need to be fine-tuned, taking into account the potential regulatory increasing costs of bureaucracy, calculation and daily reporting obligations.

The new regulatory regime should also contribute to diversify the supply. As it is well known, a broad range of manufacturers and products is essential to guarantee a competitive offer. For example, when EC asked to assess that certain products that are offered to consumers do not offer Value for Money, ESBG believes that there are already current requirements under product governance to address the performance of products and their costs and charges.

These are implemented through various measures taken by the manufacturers and distributors. Moreover, at the level of the distributors, a check is already carried out during the investment advice process as to whether the distributor also offers equivalent products to the product which is intended for recommendation. About which criteria should be used for an assessment of VfM, ESBG agrees that manufacturers already carry out comprehensive inquiries of the costs of their products in order to inform investors (i.e. in the PRIIPs KIDs), so that meaningful data is available on costs and charges. However, the client may take into other considerations like the horizon of investment of a piece of its savings, the level of security etc, so it is not possible to only take into account figures. The investor is usually interested in the most attractive possible return. The future return of a product cannot be predicted when it is launched.