Reduce bureaucracy now

It is the right approach that the new European Commission places competitiveness at the heart of its economic agenda. In this context, it is very positive that European legislators also aim to tackle the issues of reducing bureaucracy and preventing additional regulatory burdens. The German ifo Institute recently calculated that, in Germany alone, 146 billion euros in economic output are lost each year to excessive bureaucracy.

Generally, it is easier to avoid new bureaucracy than to eliminate existing bureaucracy. The recently proposed EU Omnibus package on simplifying the sustainable finance regulation illustrates how legislation with many regulatory requirements has to be adjusted retrospectively in order not to endanger the overarching objectives of the EU. This scenario must be avoided for the Retail Investment Strategy (RIS).

These important considerations must be taken up urgently in the current trilogue negotiations on the RIS. Too much bureaucracy in the securities business deters clients from investing in the capital markets. This conflicts with the original intention of both the RIS and the recently published communication for a Savings and Investment Union (SIU) to encourage retail investors to invest in the European capital markets. After all, one objective of the SIU is to offer retail clients easier access to the capital markets in order to foster economic growth and promote the competitiveness of the European Union.

In contrast, the current RIS ideas run counter to the objective of unburdening the economy by reducing bureaucracy. In its original proposal of the RIS from May 2023, the former EU Commission had laid down a massive expansion of bureaucratic requirements and did not develop any proposals to encourage clients to invest in the European capital markets. In the meantime, with a view to its “simplification agenda” in the SIU strategy, the actual EU Commission has stated that it will not hesitate to withdraw the RIS if the trilogue negotiations do not meet these objectives. We welcome that the Commission has recognized that the RIS must be radically simplified in this context or – if no meaningful simplifications can be achieved – should be withdrawn completely.

Should the joint legislators decide to finalise the RIS, we strongly suggest using the trilogue to considerably simplify the RIS. We have listed a few targeted amendments below.