EFAMA has replied to the European Commission’s Green Paper on retail financial services expressing strong support of actions to deepen the European single market for retail financial products and services, and address its remaining barriers, for consumers and businesses to make full use of it.
Alexander Schindler, President of EFAMA, says: “Investment funds – UCITS in particular – are the best possible example to date of a well-functioning EU single market for financial services, and UCITS is often cited as a successful story to find inspiration from”. The share of funds distributed on a cross-border basis in Europe is regularly increasing and stood at 42% of total European investment fund assets in 2014 (from 29 per cent at the end of 2004).
The UCITS cross-border distribution is working well, yet there is still room for improvement. EFAMA has identified a number of obstacles that are still hindering the cross-border distribution of investment funds. This mostly stems from the absence of an EU regulatory framework in certain areas, goldplating of EU legislation, fragmented marketing rules or discriminatory withholding of tax by EU Member States.
This should be addressed to further reinforce the merits of UCITS as a true cross-border financial product. In this sense, EFAMA is strongly in favour of building on the UCITS success factors and replicate these in other sectors, most notably in the area of personal pensions.
EFAMA has long advocated for the creation of an EU personal pension product as a solution to overcome the fragmentation of personal pension markets in the EU.
Peter de Proft (pictured), Director General of EFAMA, commsaysented: “We feel very strongly about the need to address the current fragmentation of the market for retirement savings. This has to be done in order to foster portability, economies of scale to lower costs and generate better returns to consumers, and also to enhance transparency, competition and innovation. The creation of a standardised Pan-European Personal Pension product (PEPP) would allow progressing in that direction“.
The response to the Green Paper is also the opportunity for EFAMA to support the important work done by EIOPA on the PEPP, which would coexist with existing personal pension products and would be used on a voluntary basis.
EFAMA equally welcomes the broader debate about digitalisation and its impact on the retail markets launched by the Green Paper. The trend towards greater digitalisation of financial services promises to bring another dimension to the way fund products are to be marketed and sold.