EU Tightens the Grip

By Søren Rahbek, Director | The 19th of December 2025

The EU has reached agreement on the Retail Investment Strategy. New Value for Money requirements mean that products under MiFID, UCITS, AIFMD and IDD must be measured directly against peers – otherwise they risk a ban on distribution.

On Wednesday, 17 December, the EU reached agreement on a new strategy for retail investors. The agreement modernises the market with a clear objective: to remove barriers and increase transparency through a significant simplification of the investment process. For market participants, this translates into new requirements for documentation if regulatory intervention is to be avoided.

Benchmarks across regulatory frameworks may trigger sales bans

At the core of the strategy is a crackdown on opaque costs. Transparency is to be increased through the mandatory identification and quantification of all costs associated with a product.

The entirely new enforcement tool is the introduction of peer-group benchmarks. It is no longer sufficient to assess a product in isolation; costs and performance must be measured directly against comparable products (peers) under MiFID, UCITS, AIFMD and IDD.

The consequences for institutions are significant. If a product covered by these frameworks deviates negatively from the benchmark, and its costs therefore do not appear “reasonable and proportionate,” this may trigger a ban on distribution. This places Value for Money firmly at the top of the product development agenda.

Documentation and advice within a new framework

Documentation requirements are tightened accordingly. Key Information Documents (KIDs) must be revised using new templates that communicate costs, risk and expected returns far more clearly than today.

At the same time, interaction between client and adviser is simplified. For diversified, non-complex, low-cost products – such as passive index funds – the requirement to test the investor’s knowledge and experience is removed. In return, marketing rules are tightened, with Member States encouraged to restrict “finfluencers” to ensure the integrity of communications.

Transparency requirements for commissions

The debate on distribution commissions concludes with a requirement for strict transparency rather than an outright ban. Commissions are permitted only if they support a tangible benefit for the customer, and the cost must be clearly disclosed and separated from other elements. Financial institutions are generally obliged to act honestly, fairly and professionally in the best interests of the client.

For experienced retail investors, the rules are also adjusted to make it possible to obtain professional investor status if they possess relevant and substantial experience.

The next step you ask?… To have a new regulatory law.

Facts: What the agreement means for the industry

• Peer-group benchmarks: Products under MiFID, UCITS, AIFMD and IDD must be benchmarked on costs and performance.

• Sanction mechanism: If costs are not proportionate compared with peers, distribution of the product may be prohibited.

• Documentation: New KID templates to ensure clearer presentation of returns and risk.

• Commissions: Must be transparent, clearly separated, and provide a demonstrable benefit to the client.

• Implementation: Final text expected in early 2026, with entry into force approximately 2½ years later.

Contact

Do you have questions about how benchmarking under the new directives will affect your product offering? Contact Søren Rahbek at soren.rahbek@cmp.as.

CMP is closely monitoring the forthcoming clarifications and is always available to discuss the content and its implications.