EU Retail Investment Strategy (RIS) View

EU Retail investment Strategy: What's the latest state of play?

To get you back in the swing of things for 2024, here's a quick recap and update on where the EU Retail Investment Strategy (RIS) has got to.

As you know the EU Commission published it's RIS proposals in May 2023 to make changes to MiFID, UCITS, AIFMD, PRIIPs, IDD and Solvency 2. Currently the EU Parliament and Council are separately considering the Commission's proposals with a view to finalising their own positions on those proposals. The final stage will be for the EU Parliament and Council to come together ('trilogues') with their own positions and agree on a final 'compromise' text.

Where are things now?

In short, things are moving slowly. It seems that both the Parliament and Council are struggling to agree internally on their positions, especially on some of more controversial aspects of the proposals - including value for money, benchmarks and inducements. These are closed-door discussions but from what we have been hearing here's a quick overview of where things have got to at each institution.

In terms of the Parliament, things are a little complicated due to the upcoming EU elections in June. The final plenary sitting of this Parliament will sit in April, and following the June elections a newly configured Parliament will then sit. If the current Parliament wants to have reached an agreed position (with the hope/expectation that the new Parliament will take that position forward), it will need to do so at that final sitting in April. This is currently looking possible. The ECON Committee (the committee responsible to preparing the Parliament's position in a 'final report') is currently scheduled to vote on its final report on 20/21 March. If that ECON vote takes place as scheduled, there should be enough time for the position to then be considered and adopted by the Parliament at that final plenary sitting in April. If that timing slides, things become more uncertain - it is possible that the new Parliament will be configured with different MEPs, different political party dynamics and different agendas, not only potentially changing the direction of the Parliament's position on RIS but also significantly delaying the timeline if internal negotiations start from scratch again.

As for the Council, the Spanish Presidency ended on 31 December 2023 and passed to the Belgian Presidency. Before passing the RIS file to the Belgian Presidency, the Spanish Presidency appears to have made some headway in provisionally agreeing its position on aspects of some of the less controversial parts of the proposals (see attached) - but the more controversial proposals have been passed to the Belgian Presidency without an agreed position in place. Given that the Belgian Presidency has said it will not prioritise the RIS file in January or February, we do not expect RIS to be back on the Council's agenda for consideration until March or April 2024. This is likely to mean that the Council's position may not be agreed until H2 2024.

It's only once the Parliament and Council have reached their respective positions that trilogues will start and a final 'compromise' text finally agreed.

What's our predictions?

Based on the current status, we predict that trilogues will not start until H2 2024 at the earliest, and may well be pushed into H1 2025. This would mean RIS rules likely coming into force in 2026/2027.

What should you be doing now?

Trade bodies and firms continue to lobby on various aspects of the proposals, and there appears to still be a lot of scope to do so, given the ongoing difficulties the Parliament and Council appear to be having in reaching an agreement on their respective positions. Firms should continue to monitor developments and align with relevant trade bodies on ongoing lobbying efforts.

We continue to monitor developments closely and will keep you updated. You can find lots of information about the RIS proposals, our views and podcasts by visiting our RIS Hub Page.

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For those also interested in the Consumer Duty in the UK, see our latest Consumer Duty View published today here.