GBIC on RIS agreement: still too complex

European legislators have agreed on key points in trilogue negotiations on the Retail Investment Strategy (RIS). The German Banking Industry Committee (GBIC) welcomes the decision by the Council and Parliament to make changes and simplifications to various aspects of the regulations originally proposed by the European Commission.

“Many of the rules originally proposed were neither practical nor in the interests of investors,” said Heiner Herkenhoff, CEO of the Association of German Banks, this year’s GBIC coordinator. “It is right that key requirements have now been reviewed and amended.”

One positive development, in the opinion of Germany’s banks, is that elements of the original Commission draft that were particularly impractical will not be implemented in their proposed form. These include the planned partial ban on inducements and the benchmark approach to the controversial value-for-money requirements for securities. 

Nevertheless, even in its currently agreed form, the RIS will not contribute to significantly more retail investors taking advantage of the opportunities offered by the capital market. The multitude of new obligations and processes continues to create an even more complex set of rules that deters rather than motivates. This means that the strategy is failing to achieve its central goal of attracting more citizens to the capital market.

“If you want to attract more people to the capital markets, you need to reduce complexity and strengthen trust,” said Herkenhoff. “Despite all the progress made in the trilogue negotiations, the RIS continues to focus too much on additional regulation rather than genuine simplifications.”

From the GBIC’s point of view, it is therefore all the more important that the upcoming technical negotiations, in which detailed issues are to be clarified, do not lead to additional burdens. Herkenhoff said, “Regulatory fine-tuning must not be used to introduce new and excessive bureaucracy through the backdoor.”

At the same time, it is a matter of consistently using the initiatives of the European Commission within the framework of the Savings and Investment Union (SIU) to dismantle the high bureaucratic hurdles that continue to hold back the securities business. This is the only way to make the securities business more attractive for clients. “Against this background and despite all the corrections, the RIS is a step backwards, as it creates additional requirements,” said Herkenhoff.