The European Parliament recently voted to reject one of a set of measures aimed at boosting retail investor participation in capital markets, known as the Retail Investment Strategy (“RIS”). The RIS forms part of the broader Savings and Investments Union (“SIU”) initiative and comprises a directive amending a number of EU directives including the UCITS Directive, the Alternative Investment Fund Managers Directive (“AIFMD”) and the Markets in Financial Instruments Directive (“MiFID”) (the “Omnibus Directive”), together with a regulation amending the regulation on key information documents for packaged retail and insurance-based investment products (“PRIIPs Regulation”).
On 12 November 2026, the European Parliament voted to reject the Omnibus Directive by 300 votes to 286. The PRIIPs amending Regulation was approved (311 in favour, 261 against, 38 abstentions).
The RIS is relevant to a range of financial market participants. Below, we summarise the rejected Omnibus Directive’s key provisions for fund managers on value for money, product comparability, undue.
Proposed value for money rules
To facilitate the comparability of financial products and to ensure that retail investors get “value for money”, the Omnibus Directive would have required managers to assess their products against peer-group benchmarks and to identify and quantify all costs and charges borne by investors. All costs and charges would have had to be justified and proportionate to fund performance, investment objectives, marketing strategy and product features.
It had been proposed to oblige managers to compare the fund’s costs and performance against a representative peer group of comparable funds marketed in the relevant EU member state and, where feasible and proportionate, in other member states. Where a fund was identified as having significantly different costs and performance compared to the relevant peer group, to the detriment of investors, the situation would have to be remediated and the fund could not be distributed if value for money could not be demonstrated.
Managers would be required to provide distributors and insurance product manufacturers (where the fund is an underlying investment) with all relevant value for money assessment information.
Proposed “undue costs” rules
The proposal would have required managers to adopt a structured pricing process to assess whether each cost charged to investors was eligible, necessary, proportionate and competitive when benchmarked.
A cost would be considered to be “due” only where it was disclosed in the fund’s prospectus or key information document (“KID”), it was necessary for the fund to operate in line with its investment strategy or with regulatory requirements, and it was borne by investors in a fair manner.
In the event that undue costs were charged to investors, managers would be required to reimburse any amounts unduly charged and would also be required to report instances of undue costs to their regulator, the depositary and the fund’s auditors. Compensation may also be payable to investors.
Proposed changes to the MiFID professional client categorisation
The changes proposed under the Omnibus Directive would broaden the circumstances in which a retail investor could elect to be treated as a professional client under the MiFID II rules. The existing requirement that the investor hold a portfolio exceeding €500,000 would be reduced to €250,000, assessed on an average basis over the preceding three years. The rules would also have broadened the manner in which investor knowledge and experience could be evidenced.
Managers and directors of funds and fund management companies, who are directly involved in the entity’s investment activity (portfolio management, asset allocation or investment strategy) would be regarded as professional clients under the proposed rules. AIFM employees working in portfolio management / risk management or marketing would be treated as professional clients solely in respect of investments in the specific AIFs on which they work.
Changes to the PRIIPS KID
The amendments to the PRIIPs regulation have been approved by the European Parliament, paving the way for publication in the Official Journal of the EU.
Under the amended rules, the KID provided to investors under the PRIIPs Regulation will have to include a prominent “Product at a glance” section. This will include a summary of the product type, the summary risk indicator, the total costs of the PRIIP, the recommended holding period and whether the PRIIP offers insurance benefits.
The new regime will require the KID to be provided in electronic, machine-readable format, unless the investor requests a paper copy. The three page limit remains, despite the addition of the “Product at a glance” section and further changes to the KID being introduced under the revised Sustainable Finance Disclosure Regulation (“SFDR”), which will require the inclusion of a section titled “How sustainable is this product?”
Most of the changes to the PRIIPs Regulation are due to apply 18 months following publication, with the requirement regarding machine-readability to apply 30 months after publication.
Next steps
The European Fund and Asset Management Association had published an open letter to Members of the European Parliament urging them to vote against the proposal on the basis that it would introduce unnecessary complexity and fragmentation in the single market rather than advancing the primary aim of the RIS to promote a culture of retail participation in capital markets. Rejection of proposals at European Parliament plenary stage is a rare event, with one notable rejection from a financial services perspective being the rejection of Level 2 measures on the PRIIPs Key Information Document under the PRIIPs Regulation in 2016.
Discussions will now take place between the EU co-legislators and the Commission in relation to next steps.
Please get in touch with your usual Asset Management and Investment Funds Department contact or any of the contacts listed in this publication should you require further information in relation to the material referred to in this briefing note.
