Financial Markets & Investor Protection
EU reaches political agreement on the Retail Investment Strategy: key advocacy wins for ABBL
Published on 28 December 2025
A political agreement on the EU’s Retail Investment Strategy (RIS) was reached overnight on 17 December, marking a major milestone in the Savings and Investments Union agenda for retail investors. Negotiators from the European Parliament and the Council announced an informal deal on new rules designed to help retail clients invest in quality financial products, with a focus on value for money, clearer advice, and improved disclosures.
Summary
Client categorisation: a calibrated opening for experienced investors
Under the new rules, more experienced and knowledgeable investors will, under defined criteria, have the option to opt into professional client status. This calibrated flexibility will enable such investors to access a broader range of investment products while maintaining a high level of protection for genuinely retail clients.
This approach aligns closely with ABBL’s proposal to facilitate access to professional status for those able to make informed investment decisions, thereby supporting capital markets funding and investor empowerment.
Value for money across MiFID, IDD, UCITS and AIFMD
The political agreement goes further by introducing a horizontal value-for-money framework across retail investment products.
This cornerstone measure will require:
- product manufacturers and distributors to assess costs, performance and key product features against objective peer-group benchmarks
- supervisory benchmarks developed by EIOPA (for IDD products)
Products that fail to demonstrate adequate value will need to be reviewed, redesigned or withdrawn before being marketed to retail investors. This measure aims to curb excessive fees and encourage simpler, more transparent and competitively priced solutions, ultimately improving returns for end investors.
Inducements: stricter tests and transparency, with national flexibility maintained
Inducement regimes are overhauled through more restrictive tests and enhanced transparency on third-party payments. Annual disclosures will also need to show more clearly the cumulative impact of all costs and charges on net returns.
The compromise confirms the Council’s “inducement test”, which has been moved from Level 2 to Level 1 to ensure greater legal clarity and supervisory consistency.
Investor journey: advice clarity, light suitability test, and digitalisation
The agreement introduces several simplifications to improve the investor experience and align rules with evolving digital practices.
- Removal of the proposed new “best interest” test, replaced by a recital confirming firms’ existing duty to act honestly, fairly and professionally in clients’ best interests
- Extension of the light suitability test to well-diversified, non-complex and cost-efficient instruments, with fewer data requirements for clients
- Removal of portfolio depreciation notification rules, previously triggered by 10% value drops, to prevent panic selling in volatile markets
- A recital on digital transformation, recognising the opportunities and risks of online distribution and clarifying that advice may be provided either in person or online, with Level 2 acts to follow in order to ensure legal certainty
Reports, review and transposition
For ease of reference, you can access the European Parliament publication here: Deal on new measures to boost citizens’ investments in financial markets
- The agreed text is still provisional and will now need to be formally approved by both Parliament and the Council before it can be published in the Official Journal and enter into force.
- Technical work on follow-up measures and implementation details is expected to continue under the incoming Cyprus Presidency of the Council of the EU, which will run from 1 January to 30 June 2026.
- With an expected application date around 24 months after entry into force, the earliest realistic date for the new RIS rules to apply in practice would therefore be towards the end of 2028, giving firms a substantial (if busy) runway for implementation.
ABBL will continue to monitor the follow-up technical work closely and will provide its members with detailed technical analysis once the final legislative text and implementation roadmap are confirmed.
Marilyn Rinck
Head of Banking Supervision, Financial Markets & ESG
Published on 28 December 2025