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To ensure that comparisons are objective and useful, the regulation provides clear criteria that entities will have to use: risk assumed, recommended time horizon, investment strategy, client profile, sustainability and type of management, among others.
The European Union is poised to introduce a significant change to how banks market investment products to retail clients. After weeks of negotiations between EU institutions, the European Parliament, the Council, and the Commission have reached a political agreement to limit fees deemed unjustified or disproportionate on investment funds, managed portfolios, and insurance products. Although formal approval is still pending, the proposed regulation is already altering the expectations of managers, distributors, and investors across Europe.
The core of the initiative is simple yet powerful: banks will have to demonstrate that the fees they charge are backed by real value for the customer . If there is no tangible benefit, such as improved risk-adjusted returns or additional services that justify the cost, the fee should not be allowed. This requirement not only promotes greater transparency but also mandates a comparison with similar products offered by competitors, forcing institutions to justify their offerings to the open market.
This approach has a potentially significant impact in Spain, where the investment fund industry manages over €465 billion in assets . A large portion of this volume corresponds to actively managed products marketed by banks with higher fees than those of passive vehicles, such as index funds or those compared to simple benchmarks. In this new context, offering an expensive fund with a poor track record compared to its peers becomes a difficult argument to make.
To ensure that comparisons are objective and useful, the regulation establishes clear criteria that entities will have to use: risk assumed, recommended time horizon, investment strategy, client profile, sustainability, and type of management, among others. In other words, it will not be enough to simply present figures; these figures must be interpreted according to standards that reflect the reality of the product compared to its alternatives.
One of the most sensitive aspects of the negotiations has been retrocession fees , that is, the payments that asset managers make to banks for distributing their funds. These practices, viewed with suspicion by regulators, can generate conflicts of interest and skew recommendations toward products that benefit the institution more than the saver. The new regulations aim to put an end to incentives based on sales volume rather than on suitability for the client.
The text also includes measures for when investors choose funds through digital platforms. These platforms must clearly identify products for which the entity does not receive incentives, facilitating more informed decisions.
Industry associations warn that, without careful design, these rules could lead to a form of indirect price control or additional regulatory burdens. However, proponents argue that the adjustment aims to balance the relationship between banks and small investors, prioritizing real cost-adjusted profitability and protecting the end customer.
This regulatory package, once approved, could redefine the fund distribution model in Europe, pushing the sector towards greater transparency, less commercial bias and competition more focused on real results for retail investors.