(This article has been updated to include comments from MEP Yon-Courtin.)
The European Union’s Retail Investment Strategy is teetering on a tightrope.
Plans for a final vote in a key European Parliament committee have been pushed back to late March, casting doubts over its final adoption before the next EU elections. The Parliament will only have one opportunity to pass the ambitious package in April, during its last session before the EU’s current political term concludes in May.
The parliament’s economic affairs committee was initially due to vote on the package in February. People familiar with the discussions see various reasons for the delay, including the complexity of the package and the challenge to translate many new amendments the industry was invited to submit into all of the EU’s official languages.
“The reasons for the delay are that there are a number of controversial/difficult issues which have been an issue from the very start of the process,” said Peter Norwood, the senior research and advocacy officer at activist consumer group FinanceWatch.
Norwood said progress is being held up by the more controversial aspects of the strategy, including the partial ban on inducements and value-for-money clauses.
No sign of an agreement
“The extension until the end of March suggests that rapporteur Stéphanie Yon-Courtin may be facing challenges in navigating the situation,” said Arnaud Houdmont, director of communications at Better Finance, a European investor interest group. “There’s currently no sign of an agreement, and anticipating a plenary vote before the elections seems very unlikely.”
The European Parliament elections are to be held from 6 to 9 June 2024. The parliament has scheduled two final plenary sessions in April. If the RIS package, as the strategy is known, is not adopted in April, the original proposal will be dead. Only a new European Commission could initiate a fresh proposal and that could take another few years, even if it decides to go that direction.
Removing key concepts
Yon-Courtin, a French liberal MEP, tabled amendments in October that removed key components of the European Commission’s proposals, including the value-for-money concept, the best-interest-test for investors and a partial ban on inducements paid to financial intermediaries. She had also proposed to extend the review period, at which the Commission can reconsider the legislation, from three years to five.
Efforts to reach Yon-Courtin on Tuesday were unsuccessful. A person answering her office’s telephone explained the delay as being due to “the huge amount of amendments that we received,” which imposed extra time for translation, for example. She explained that it didn’t leave that much time in the end for negotiation, which is why a decision was taken to allow more time for negotiations.
“The new schedule means that obviously the file cannot be completed prior to the EU elections,” said Norwood. He pointed out, however, that even if the parliamentary committee had reached a deal in January, allowing for its passage in a February plenary session in Strasbourg, it still wouldn’t have been managed before the election. “In order for EU legislation to be completed in this mandate, trilogues would need to be concluded by March.”
Delay might be better
Better Finance’s Houdmont bemoaned his lack of a crystal ball, but offered that a delay might benefit consumers. “If adopted before the next legislature, it would likely result in a diluted RIS and the maintenance of the status quo, favouring the interests of a small group of vested interests.”
Houdmont said he was more optimistic about a delay past the elections. “A delay that pushes the adoption of the RIS into the new legislature could lead in either direction.”
He reiterated Better Finance’s message, saying that “The RIS, with the potential to deliver tangible benefits for consumers, the environment and society, is in danger of being watered down to the point where it has no discernable impact for retail investors.”
Yon-Courtin still aims for RIS vote on time
French MEP Stéphanie Yon-Courtin is the European Parliament’s rapporteur on the Retail Investment Strategy, or RIS. In this central position she initiates and coordinates amendments and informs fellow MEPs where a consensus may be reached. As a French lawyer from Normandy specialised in European business law she became MEP in 2019 on a ticket for the Renaissance party, part of liberal Renew Europe group.
In response to questions from Investment Officer, she said on Wednesday that the RIS package is a “priority file” for Belgium’s EU presidency and “politically sensitive”. She said she still aims to agree and vote on the parliament’s position before the end of its term.
“Because of some delays in translation procedures, I decided to review the calendar last year to have sufficient negotiating time,” she said. “This is a priority file for both the European Parliament and the Belgian Council Presidency. If ambitious, it will impact the citizens’ daily lives when it comes to saving and investing their money. Those important topics are therefore also politically sensitive. This is why having sufficient negotiating time is essential.
“This will not have any impact on my initial negotiation objective which is to agree and vote on the European Parliament’s position before the end of this parliamentary term.”