The European Council and the European Parliament have reached a provisional agreement on an updated EU retail investment framework aimed at modernising and simplifying investor protection across investment products and distribution channels, while improving cost transparency and comparability for retail investors. The package introduces a “value for money” approach requiring retail investment firms to identify and quantify all investor-borne costs and charges for advised products and to assess whether total costs are justified and proportionate against agreed standards and supervisory benchmarks, with products failing this assessment not to be approved for sale. It also strengthens and standardises product disclosures, including new templates for Key Information Documents (KIDs) to be developed by the relevant European supervisory authorities, and requires KID information to become machine-readable 30 months after the entry into force of the revised Packaged Retail and Insurance-based Investment Products (PRIIPs) rules. Investor-protection measures include strengthened inducement safeguards, including a requirement that inducements deliver a tangible client benefit and be disclosed clearly and separately, while preserving the ability of member states to introduce an inducement ban. The framework also simplifies parts of the suitability process for recommendations on diversified, non-complex and cost-efficient instruments by removing the need to assess a client’s investment knowledge and experience, introduces provisions encouraging member-state action on financial literacy and fair marketing including attention to “finfluencers”, and adjusts the criteria for treating more retail investors as professional clients, including revised transaction and portfolio thresholds and an additional education or training pathway subject to constraints. Technical work will continue with the aim of finalising the legal texts early in 2026. Member states will have to transpose the new rules 24 months after publication in the EU’s Official Journal, and the rules will apply 30 months after publication, except for the new PRIIPs rules which will apply 18 months after publication.
European Council 2025-12-18
European Council and European Parliament agree updated retail investment framework with value-for-money tests and stronger inducement rules
The European Council and European Parliament have provisionally agreed on an updated EU retail investment framework to enhance investor protection and cost transparency. Key measures include a "value for money" approach for assessing investment costs, standardized product disclosures with machine-readable Key Information Documents, and strengthened inducement safeguards. The framework simplifies suitability assessments for certain products and encourages member-state action on financial literacy and fair marketing practices.