The Retail Investment Strategy (RIS) is set to come into effect soon, introducing significant changes in the landscape of retail financial product distribution, with direct impacts on the MiFID and IDD directives. One of the key novelties of the RIS is the reinforcement of financial product governance requirements, through the introduction of the Value for Money (VfM) principle, which is set to transform how financial product manufacturers and distributors will operate.
Under the new rules, producers and distributors of retail investment products will need to demonstrate that the costs associated with the products are justified by the performance and benefits provided to investors. This evaluation will need to be done not only for individual products but also by comparing them to a peer group of comparable instruments at both the national and European levels.
The introduction of this measure will have significant implications: products that do not meet these criteria may be subject to corrective measures, ranging from modifications to the product’s characteristics to withdrawal from the market in extreme cases.
Angelo Messore, partner at LEXIA, shared his opinion on the matter in an interview with Il Sole 24 Ore: “The value for money rules can have a blocking effect on distribution processes. If the product does not meet these criteria or deviates significantly from the peer group, it cannot be distributed, or the intermediary must evaluate remedial measures to correct the value-for-money ratio.”
These observations highlight how the regulation can directly influence financial product distribution strategies, imposing greater responsibility and transparency on institutions in evaluating offerings.
Read the full interview here >
