WSBI-ESBG Managing Director: Retail Investment Strategy, an advancement but still missing critical aspects

On 29 June 2023, a public hearing on the Retail Investment Strategy took place in the ECON Committee in which WSBI-ESBG Managing Director Peter Simon was invited to provide input to the debate.

To refresh our memories; on 24 May 2023, the Commission adopted in the framework of its Retail Investment Strategy a proposal on retail investor protection rules and a second proposal modernising the PRIIPs key information document. During the public hearing, Peter Simon, along with other experts Verena Ross (ESMA), Barbara Alemanni (Bocconi), and Agustín Reyna (BEUC), had the chance to publicly confront with ECON members, European authorities, and many stakeholders on this very important legislative proposal.

Mr. Simon acknowledged that the proposal does not have that “potential disruptive impact” that it would have had with a full ban on inducement.
Many aspects are surely positive and will be supported by the savings banks, meanwhile a few aspects are very critical and must be deeply reconsidered during the legislative process.

Providing a large number of sound data and information during his speech, he recalled that the core business of saving banks is to serve the customers to the best of their ability in order to have clients financially grow and society improve.

That’s why – either on site or online – banks have always engaged with investors throughout a relevant number of well-equipped tools, facilities and sound professionals which deserve fair recognition and proper remuneration.

To this end, he criticised the European Commission’s intention of banning inducements for the “non-advised transactions”, where a client places an order not based on a bank recommendation but profits from existing bank resources and services. He stressed that a ban of inducement for this is not only counterproductive but will leave more people either financially unserved or in the hand of uncontrolled “tiktok-advisors”.

Peter Simon encouraged the Members of the European Parliament to improve the legislative proposals in paramount topics: Ensuring remuneration for non-advised transactions, installing a realistic transposition timeframe, and questioning the proposed benchmarking exercise as it is counterproductive for the envisaged aim to ensure “value for money”, undermining competition and innovation.

Furthermore he appealed the Parliamentarians to stay in the driver`s seat as the current legislative proposal outsources this highly political issue totally to undisclosed so called “Level 2” measures where the influence from the European Parliament and Council is very limited.

As Peter Simon effectively remarked, focusing only on the price characteristics of financial products disregarding many other qualitative aspects is regularly not in the customer’s best interest, given that the cheapest option is mostly not the best one for the client and not closest to his needs.

Concluding his remarks, Peter Simon reiterated that his message does not come from banks aiming to charge consumers in unappropriated way since the aim of the European Savings and Retail Banking Group family, is to serve their clients to their best interest by leaving nobody behind and being dedicated to let their clients financially grow.