European Parliament rejects major Retail Investment Strategy reforms

In a major development, the European Parliament has this morning rejected the politically agreed Omnibus Directive which incorporated the majority of Retail Investment Strategy reforms (including value for money requirements, changes to inducement rules, enhancement to marketing requirements, client categorisation reforms). The Parliament rejected the Omnibus Directive by 300 votes to 286, but did approve the accompanying PRIIPs/KID Regulation by 311 votes to 261.

In practice, the PRIIPs Regulation should now be able to proceed towards formal adoption, while the Directive is back in uncertain territory. The main scenarios appear to be:

1. Targeted renegotiation of the more contentious elements, either through a separate process or potentially by incorporating some of them into other legislative packages currently under discussion, such as the Market Integration and Supervision Package;
    
2. A broader reopening of the RIS political compromise with the Council; or
    
3. A prolonged stalemate, if Parliament cannot assemble a majority around a revised approach.

For now, we would therefore treat the PRIIPs file as progressing towards adoption, while the Directive’s next steps remain uncertain. We await further comments from the European Parliament and Council, which may indicate the direction of travel for these key reforms.