Claire Guilbert, a partner at Norton Rose Fulbright in Luxembourg and an investment management and investment funds lawyer, in an interview with Delano, examined the implications of the European Parliament’s proposed changes to the retail investment strategy--a set of measures aimed at enhancing investment outcomes for retail investors within the European Union.

The strategy covers various aspects of retail investment, including investor protection, access to financial advice, product transparency and market integrity. Its objective, according to the parliament, is to empower retail investors to make informed investment decisions aligned with their needs and preferences, while also ensuring that financial products and services offer value and are suitable for retail investors. On 23 April 2024, the European Parliament its position on the RIS, significantly enhancing the original European Commission proposal.

Discussing the proposed measures, Guilbert emphasised the need for European attitudes towards private markets investments to evolve in line with market developments, stating “If this requires a new regulatory framework to ensure that all investors, including retail, are sufficiently protected, so be it. Then, ideally sooner rather than later”. She welcomed the European Parliament’s adoption of its negotiating position on the RIS package before the parliament elections on 6-9 June 2024, expressing optimism, stating that “This means that there is a good chance for the trilogue negotiations to start after the summer recess, so as to be in a position to reach a compromise by the end of 2024 with a final adoption of the RIS to follow at the beginning of 2025.”

“That said, there are different ways to protect [investors], and this is where we need to approach the RIS proposal very carefully,” cautioned Guilbert. She reminded that the RIS provisions “will impact many market players, from the initiator of a product to its distributor, and it is key to ensure that nobody is sacrificed on the way because they all have a key role in the value chain.”

Guilbert agreed that the parliament’s amendments to the commission’s proposal realign the focus with the original aim of empowering retail investors to make investment decisions aligned with their needs and preferences. Notably, the parliament proposes to remove the commission’s proposition of a partial ban on inducements for execution-only services, aiming to avoid restricting products and services available to retail investors. “This will for sure be strongly debated, but we do hope that such a ban will not be kept because it may risk having the opposite effect as what the RIS aims at, that is to remove certain products and services from the menu offered to retail investors,” argued Guilbert.

The European parliament’s alternative approaches to investor protection include creating firm peer reviews and benchmarks for supervisory purposes, regulating , enhancing financial education and increasing information transparency, highlighted Guilbert. However, she acknowledged the complexity of the legislation and concluded to continuing “looking forward to the further developments thereon during the trilogue process.”

In her capacity, Guilbert advises local and international asset managers on structuring, formation, offering, and organisation of regulated and unregulated investment funds, particularly focusing on private equity, debt, and real estate strategies. She also addresses regulatory questions related to alternative investment funds, their managers and service providers.