TITLE: European Parliament and Council Agree on Retail Investment Strategy to Strengthen Investor Protection
BODY:
On December 18, 2025, the European Parliament and Council reached an informal agreement on amendments to several European Union directives aimed at reinforcing investor protection and promoting retail participation in capital markets. The agreement, known as the Retail Investment Strategy (RIS), introduces comprehensive measures to ensure financial advisors act in clients' best interests and protect consumers from misleading information.
The agreement establishes clear suitability requirements for financial and insurance advisors, who must assess clients' knowledge, experience, financial situation, risk tolerance, and investment objectives before recommending products. Investment firms must ensure products offer value for money and enable retail customers to compare costs, charges, performance, and benefits. The European Securities and Markets Authority (ESMA) and European Insurance and Occupational Pensions Authority (EIOPA) will develop supervisory benchmarks to help national competent authorities assess value for money compliance.
The agreement addresses inducements from third parties, permitting them only when they enhance service quality and conflicts of interest are mitigated. Notably, the RIS introduces supervision of financial influencers and social media promotion of investment products. Investment firms using financial influencers must maintain written agreements, contact details, and exercise control over their activities. The agreement also mandates that European Union countries promote financial literacy and education measures, particularly targeting younger consumers vulnerable to online mis-selling.
The provisional agreement requires formal approval from both the European Parliament and Council before entering into force. The agreement represents a significant step toward establishing a European savings and investment union while maintaining accessibility to financial advice.