The European Parliament has rejected a negotiated deal on sweeping changes to retail investment advice and investor protection, while approving a separate proposal to update the information given to buyers of certain financial products.
In a vote in Brussels on 12 November, MEPs rejected the provisional agreement on the retail investment directive by 300 votes to 286, with 23 abstentions. They approved the accompanying changes to the regulation on packaged retail and insurance-based investment products by 311 votes to 261, with 38 abstentions.
The split leaves two parts of the European Union’s retail investment strategy on different tracks. The directive’s proposed changes to advice, costs and marketing have not been agreed. The product-information measure has passed its parliamentary vote but still needs further formal steps before it becomes law.
What the rejected deal covered
The directive was intended to amend five existing pieces of EU financial services legislation, covering investment firms, funds and insurance. Its provisions included a framework for assessing whether investment products offer value for money and whether their costs are justified.
For fund managers, the negotiated text would have introduced more prescriptive processes for assessing costs and value. The proposed framework included comparisons with groups of similar products and checks for undue costs. The rejection does not remove obligations that firms already have under existing rules.
Another contested part concerned inducements: payments or other benefits that firms or intermediaries may receive in connection with an investment service. Such arrangements can create conflicts between a customer’s interests and incentives to sell a particular product. The negotiated deal would have strengthened safeguards, including a test intended to show that an inducement provides a tangible benefit to the client.
An earlier Commission proposal for a partial ban on inducements for certain sales without advice had already been removed from the compromise. The vote therefore rejected the negotiated version, not a text containing that original partial ban.
The directive also included measures aimed at financial influencers and marketing. Under the deal, investment firms using influencers to promote products would have needed written agreements with them and oversight of their activities. Other proposed changes concerned the information given to clients and the circumstances in which experienced retail investors could be treated as professionals.
A separate vote on product information
The approved text concerns key information documents, or KIDs, for packaged retail and insurance-based investment products, often referred to as PRIIPs. These documents are designed to give individual investors a concise description of a product, including its risks and costs.
The proposed changes include a standardised section at the beginning of the document bringing together the product type, a summary risk indicator, total costs and the recommended holding period. The intention is to make important details easier to find and compare across products.
Electronic delivery would become the default, while investors could request a paper copy free of charge. The document could also be presented in layers digitally, with the summary as the first layer. It would have to remain separate from marketing material.
Further changes address how performance information is presented and how documents are made machine-readable. European supervisory authorities would develop technical standards to support consistent presentation. The existing requirements remain in place for now; the parliamentary vote does not by itself make the new provisions immediately applicable.
Arguments over the compromise
The European Commission proposed the retail investment strategy in 2023, with the aim of improving protection and confidence among people investing their savings. Parliament and Council negotiators reached a provisional agreement in December 2025, and Parliament’s economic affairs committee approved the negotiated texts in June 2026.
Before the plenary vote, the European Fund and Asset Management Association urged MEPs to reject the strategy. It argued that the compromise would add regulatory complexity and legal uncertainty. The investor organisation Better Finance took a different view after the vote, saying that the compromise would still have improved accountability for costs and calling for the legislative work to continue.
The directive procedure is not simply complete because the provisional deal was voted down. Amendments are expected to be tabled before a further plenary vote, while the final shape of any revised rules remains uncertain. The PRIIPs text, meanwhile, can move towards formal adoption, including a Council decision and publication in the EU’s Official Journal. The timetable for applying the changes depends on those remaining steps.
