FECIF Editorial

Those who wish to strengthen retail participation in capital markets must not build regulatory barriers to entry. Yet current developments in Brussels suggest a growing risk of precisely that. Two legislative initiatives are currently under the spotlight: the Retail Investment Strategy (RIS) and the Framework for Financial Data Access (FIDA). Both aim to reshape key aspects of the European financial market architecture – but with vastly different objectives and implications.

Retail Investment Strategy: Well-Intended but Ill-Designed

The declared aim of the RIS is to empower retail investors and mobilize private capital to stimulate economic growth. A legitimate goal, in principle. But the way the legislative process is unfolding tells a different story. The ongoing trilogue negotiations have reached an impasse, with three divergent texts from the European Commission, the Council, and the Parliament confronting each other – some with fundamental contradictions.

According to Members of the European Parliament, the current trilogue represents an unprecedented situation: for the first time, both Council and Parliament have formally rejected the Commission's original draft, jointly urging the Commission to revise and simplify its own proposal. A six-week deadline was set for this task. In response, the Commission – visibly irritated – has indicated it may withdraw the proposal altogether if no agreement is reached in the next round. This level of confrontation is virtually unheard of in the history of European legislative negotiations.

Substantively, this escalation is not without reason. The current RIS draft falls far short of its promise. If we are serious about transforming savers into investors, we must also offer them meaningful support. Bans on advice and excessive layers of documentation lead not to empowerment, but to overload, insecurity, and retreat. Especially when it comes to long-term and complex products – such as infrastructure or real estate – professional guidance is indispensable. That support comes at a cost and must be properly acknowledged and enabled by regulation.

A policy that isolates investors and weakens intermediaries while championing disclosure for its own sake will not drive capital into the markets. What we need instead is a more pragmatic integration of RIS into the broader framework of the Savings and Investment Union – one that reflects the realities of the market and the vital role of advisory services.

FIDA: Sharing Data – But with Perspective

FIDA is of a different nature. Its aim is not to foster investment directly, but to lay a regulatory foundation for how financial data can be accessed and exchanged. At its core, the initiative seeks to improve transparency and product comparability – especially for retail clients – through standardized, machine-readable data formats. It holds substantial potential not only for retail clients, but also for financial advisers, who would benefit from working with harmonized, high-quality datasets.

In consultations with MEPs, a picture of divided opinion emerges. On the one hand, FIDA could enable innovative business models, support new market entrants, and deliver genuine value through better comparability. On the other hand, serious concerns persist – particularly around data protection, the governance of sensitive personal and advisory information, and the risk of misuse through AI-powered systems that aggregate and repurpose financial data.

One increasingly discussed concern is the potential for regulatory backfire: the fear that high-quality advisory and client data collected within the EU – especially through trusted intermediaries – could be systematically harvested by third-country platforms, most notably from the U.S. Given the superior quality and granularity of European financial data, this is not a trivial risk. It would be deeply counterproductive to build a system that facilitates data flows out of Europe, rather than reinforcing trust and transparency within its borders.

From FECIF’s perspective, FIDA should be approached with neither blind optimism nor blanket resistance. Much will depend on the operational details – on how the current framework is translated into real-world practice. Our stance is clear: the scope of data access must be limited to what is truly necessary. No more, no less. This is the only way to achieve efficiency gains without overwhelming consumers or flooding markets with redundant, low-impact information.

We would also do well to reflect on PSD2. That directive, too, promised a wave of market dynamism and innovation – which never fully materialized. Data does not create markets by itself. It must be managed with care, balance, and clear purpose.

Our Call: Proportional Regulation with Market Relevance

Taken together, RIS and FIDA illustrate the scale of the challenge facing European policymakers today. Ambitious targets collide with the operational reality of market structures, consumer behavior, and intermediary functions. And in this friction lies a risk: that well-meaning regulation may ultimately do more harm than good.

What is needed now is a new realism in the regulatory discourse – less ideology, more pragmatism. We must recognize the indispensable role of professional intermediaries. We must stop treating financial advice as a liability and start seeing it as a cornerstone of participation and trust. And we must ensure that the data economy evolves in a way that empowers consumers, rather than exploiting them.

At FECIF, we will continue to advocate for thoughtful, balanced frameworks – not regulation for its own sake, but policy that genuinely supports capital formation, trust, and financial inclusion.

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