Council of EU and EP reach provisional agreement on proposed retail investment strategy package

The Council of the EU and the European Parliament (EP) have reached a provisional political agreement on an updated retail investment strategy package to empower and protect consumers and increase competitiveness in the EU's financial markets. The package takes the form of a directive containing targeted amendments to a number of other EU directives in the area of financial services such as the Markets In Financial Instruments Directive (MIFID), the Solvency II Directive, the Directive For Undertakings For Collective Investment In Transferable Securities (UCITS) and the Alternative Investment And Managers Directive (AIFMD), and a regulation amending the Packaged Retail And Insurance-Based Investment Products (PRIIPs Regulation).

The Council of the EU and EP confirm that agreement has been reached in the following areas:

• Value for money – firms must identify and quantify all costs borne by investors related to the investment products they advise. Products failing to offer value for money should not be released onto the market and sold to retail customers, and who should be able to compare investment products' costs, charges, performance and non-financial benefits.
• Inducements – a new test will be introduced to ensure firms act in the clients' best interests, enabling them to distinguish inducements from other fees.
• Investment advice – advisers must ensure that products and services are suitable for clients' needs by assessing factors such as knowledge, experience, financial situation, risk tolerance, and investment objectives.
• Client journey – advisers providing recommendations to consumers related to diversified, non-complex, cost-efficient instruments, will no longer need to assess clients' knowledge and experience as part of the suitability assessment. More retail investors will be permitted to be treated as professional clients, provided they satisfy criteria concerning their investment experience.
• Financial literacy and financial influencers – member states must promote the financial literacy and education of customers on the responsible purchase of investment and insurance product tailored to specific groups, including younger investors. Firms using financial influencers to market products, or contracts, must have written agreements with them, their contact details and have control over their activities.

The provisional agreement now needs to be approved by both the EP and Council before the new rules can enter into force. Technical work will continue to finalise the legal texts early in 2026. Member states will have to transpose the new rules 24 months following their publication in the Official Journal of the European Union. They will start applying 30 months following their publication, except for the new rules under PRIIPs which would start applying 18 months following publication.

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