Stéphanie Yon-Courtin
In a May policy paper, the Commission fretted about the transatlantic gulf — as just 17% of EU household assets are held in securities, compared to 43% in the US — and set out new rules of the game to build trust in investment.
Perhaps most controversially, the EU executive wants a partial ban on inducements — the monetary bonuses that intermediaries get from manufacturers when they sell a financial product.
The Commission says it wants consumers to get clear and fair advice when buying financial products, without sales staff being swayed by their own pay packet.
But those incentive payments are also lucrative, and in 2015 amounted to €5.2 billion in the insurance sector alone, according to a study by EU watchdogs.
Though the Commission's proposed inducements ban would, at least initially, only apply where intermediaries aren't providing financial advice, it's already met with an immediate pushback from the European Parliament, where liberal lawmaker Stéphanie Yon-Courtin has been put in charge of rewriting the rulebook.
Yon-Courtin, from Emmanuel Macron's Renaissance grouping, told a conference convened by the European Fund and Asset Management Association (EFAMA) she has "erased" the proposed rules from her legislative draft, saying "I don't believe that a ban, either partial or total, is the solution to all our issues."
Bias
A series of benchmarks set out in the Commission's plan — which could see underperforming funds forced to withdraw from sale — could imply state-imposed price controls, and the norms are "biased towards low-cost products," Yon-Courtin said.
Her views, first set out in a 9 October document, are only a first draft — but there's evidence that the Commission's plans will also face headwinds in the Council, the body grouping EU governments that must also agree the new law.
"On inducements … the reception by member states was quite mixed," Fernando Álvarez-Cienfuegos, Financial Services Counsellor for the Spanish government, which is currently chairing Council talks, told the same conference. "We will need to work to explore alternative solutions."
In both the Netherlands and UK, both of which have banned inducements, official studies found the quality of financial advice improved.
A January study by the European Securities and Markets Authority suggests that buying the right product can make all the difference — as the high fees financiers charge for actively managing mutual funds typically wipe out the extra benefit for consumers, compared to funds which merely track markets.
And consumer lobby groups such as the Brussels-based BEUC also want to ban inducements, arguing they reduce supposedly impartial financial advice to little more than a sales pitch that leaves customers frustrated and disengaged.
Alternative
But according to researcher Maximilian Bierbaum, UK restrictions may not have made markets fairer, more transparent or more accessible. Encouraging retail investment won't happen overnight — and financial regulations are not the be all and end all, he believes.
"The best rules have no effect if people don't have the awareness," said Bierbaum of encouragements to investment, implying the need for measures to shift cultural taboos rather than more EU-led consumer protection rules.
In some countries such as Germany, stock markets are perceived as risky speculation. Many Europeans might be wary of emulating the US, where the absence of a welfare state may mean families are forced to turn to private markets to offer a safety net.
Fortunately the EU has a poster child closer to home — in Sweden, according to Bierbaum, who's head of research at London-based think tank New Financial.
Starting half a century ago, the Nordic nation brought in a raft of measures to help regular citizens, as Bierbaum puts it, "have a stake" in the economy.
Today, Swedes — with a simplified tax structure on their investments, easy access to digital technology, a nonprofit programme to inform young investors — have more than double the EU average of ownership of stocks, bonds and funds.
Conflicts
Yon-Courtin and Bierbaum's scepticism about heavy-handed regulation appears shared by the industry.
Many sector players argue that conflicts of interest can be resolved by market transparency rather than extra paperwork, and that the Commission's plan may protect existing investors, but won't persuade new ones in.
Without inducements, clients must pay upfront for financial advice, which many are reluctant to do, industry actors claim.
When it comes to boosting retail investment, "we don't have a silver bullet — otherwise we'd have done it already," Sandro Pierri, chief executive officer of BNP Paribas Asset Management and EFAMA president, told reporters last week.
"Tax incentives are clearly the first thing that comes to mind" when it comes to encouraging individual investors, he said — referring to fiscal incentives that have long been a staple of US retirement saving.
Others argue that education is important — and that, when it comes to investment, quality is as important as quantity.
"Another trend around young retail investors: they massively invest in cryptoassets," Delphine de Chaisemartin, deputy director general of French asset management lobby group AFG, told the conference.
"Is that really the retail investors that we need?", de Chaisemartin asked. "Are they going to finance the European economy? I'm not sure."
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