Update on the Progression of the Retail Investment Strategy (RIS)

Tue Mar 26 2024

On the 20th of March, the European Parliament ECON (Committee on Economic and Monetary Affairs) committee voted to approve Rapporteur Stephanie Yon-Curtin’s report on the RIS.  A majority of the ECON MEPs (32 in favour, 21 against, 1 abstention) expressed their position against an overall ban on “inducements”/commissions.

Outlined below are approved compromises on some of the key issues:

  • Does not contain any bans on inducements for non-advised sales (execution only).
  • Does contain a ban on inducements for IBIPs in case the client is informed that advice is given on an independent basis, it is clarified that this does not prevent intermediaries whose legal status qualifies them as independent (ex: insurance broker) to receive inducements if they present themselves as not contractually tied to specific insurers.  (Not relevant in Ireland as ban already exists)
  • According to the amended “best interest of customers test”, when providing investment advice (and to receive inducement), intermediaries would have to inform the customer of the range of IBIPs assessed. The range of IBIPS must reflect the business model of the intermediary. (Already the case in Ireland)
  • To recommend the most cost-efficient IBIP, its performance, level of risk, costs and charges will have to be taken into account.
  • The benchmarks provisions in IDD and MiFID II have been amended and are now intended as a supervisory tool for national competent authorities to facilitate identification of potential outliers: EIOPA will develop common European benchmarks for IBIPs manufactured and distributed cross border.
  • The Product Oversight Governance provisions in IDD and MiFID II have also been amended. They include requirements for distributors, such as peer grouping analysis, peer analysis of service costs and others. Intermediaries are also mentioned in the product approval process.

Next Steps

The ECON members also voted in favour of giving a mandate to the Rapporteur and shadow Rapporteurs for starting trilogue discussions with the Council and European Commission.

Brokers Ireland will continue to monitor the progress of the RIS as it progresses through the EU legislative process and will update members accordingly.

 


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