Brussels, 29th April 2009
Financial services: Commission proposes
better investor protection measures for packaged retail investment
The European Commission has committed to delivering
important improvements to investor protection measures for the main investment
products bought by retail investors. Inconsistencies in existing standards can
be detrimental to investors and can lead to competitive distortions in the
retail investment market. The Commission's conclusions, set out in the
Communication on Packaged Retail Investment Products, are that product
information requirements and rules on product sales need to be improved and made
more coherent. The Communication outlines proposals for a new, horizontal
legislative approach, drawing on the best of existing requirements and applying
these to all relevant products. The Commission will now begin work on the
detailed legislative proposals required for this new approach, and will provide
an orientation on the work by the end of 2009.
Internal Market and Services Commissioner Charlie McCreevy said: "The
financial crisis has underlined once again how important it is that retail
investors are able to make informed investment decisions. It is vital that
investors receive information they can trust and understand about the
investments they make, and that those selling investments always treat investors
fairly and focus on their needs. The ambitious programme of work we have
announced today is designed to take us a good way towards this goal, by ensuring
that information about and sales of packaged retail investment products are
regulated to high and consistent standards."
The proposals focus on product disclosures and sales processes for all
packaged retail investment products, such as investment funds, insurance-based
investments and the various types of structured products. These products
dominate the retail investment market, satisfy similar investor needs and raise
comparable and important investor protection challenges.
The Communication does not contain detailed legislative proposals at this
stage but sets out the high-level principles of a horizontal approach to product
disclosures and selling practices and commits the Commission to bring forward
legislative proposals to deliver these results.
- The market for packaged retail investment products is very large, and can be
estimated to have been worth up to 8 trillion EUR at the end of 2008.
- These products can offer considerable benefits to retail investors. However,
they are often complex and difficult for investors to fully understand,
particularly with regard to their risks and costs.
- These proposals are part of the reform programme set out in the Commission
Communication for the Spring European Council (IP/09/351)
to rebuild confidence and to deliver responsible financial markets for the
- The Commission has been working with the Committee of European Securities
Regulators (CESR) on proposals for an investor-friendly product information
document for UCITS funds,
the 'Key Investor Information' (KII), which forms a good benchmark for other
packaged retail investment products.
- Rules on product sales, whether by an intermediary or product provider,
cover such areas as conflicts of interest, inducements and the suitability or
appropriateness of the sale. The Commission considers that the relevant
provisions of the Markets in Financial Instruments Directive (MiFID) provide a
good benchmark for the sale of all packaged retail investment
More information is available at:
 Undertakings for
Collective Investment in Transferable Securities