The European Commission has on February 21, 2022, launched a targeted consultation to gather views on how to improve retail investing in the European Union. While Europe has one of the highest individual savings rates in the world, the level of retail investor participation in capital markets remains very low compared to other economies. That is why the Commission is preparing a new retail investment strategy, which aims to take a holistic view of investor protection rules.
As part of the preparatory work for this strategy, the Commission launched a public consultation in 2021, which showed that many stakeholders – both industry and consumers – called for simpler and more client-focused ways to assess clients’ investment needs and constraints.
Today’s targeted consultation aims to look at specific ways to do this, in particular by improving so-called suitability and appropriateness tests, which assess investors’ profiles. One particular area that the consultation explores is whether retail investors would benefit from a new type of suitability assessment, focused on their personal situation and investment needs, which could provide them with more support along their investment journey to better achieve their investment objectives.
The consultation is open until March 21, 2022, and the feedback received will be used to prepare the upcoming retail investment strategy. The overall aim of work in this area is to make the EU an even more attractive and safer place for individuals to save and invest and to increase retail investors’ participation in capital markets.