BRUSSELS — The EU wants its everyday citizens to invest. The trouble is, it can’t find a way to stop the finance industry from ripping them off.Lawmakers and governments clinched a political deal in the early hours of Thursday morning on a major revamp of the rules governing ordinary people’s investments in products like stocks, bonds and mutual funds.After two and a half years of talks on the package, negotiators presented the deal as a major win for the EU’s project to encourage savers to invest and develop a deeper financial market to rival Wall Street. But what they didn’t say is how much the plan has been watered down from its original ambition, faced with heavy lobbying from the finance industry and governments.Industry pushback and national interests have consistently hamstrung Brussels’ decade-long bid to create a financial market that could rival Wall Street— a bad omen for the Commission’s ambitious new policies for the markets plan, including its move to create a powerful finance watchdog, where forceful pushback from capitals is already underway.Karel Lannoo, the chief executive of EU thinktank CEPS, called the deal a “false start” for the capital markets plan and said it “should be withdrawn.”Expectations versus realityThe original plan for the rules would have introduced muscular consumer protections to stop financial advisers from pushing consumers to invest in products that don’t deliver the best returns for them and ripping them off on fees.The Commission had also wanted to ban finance firms from receiving kickbacks for peddling investment products to mom-and-pop investors. The concern was that a bank, for example, would face a conflict of interest if it had a financial incentive from an asset manager to recommend a specific mutual fund to its clients — regardless of whether that fund performs well or not.The EU executive also wanted to set up EU-wide public benchmarks on the cost and performance of financial products. Financial firms would have had to compare these products to the threshold before putting them on the market to ensure their customers get fair value for money.The finance industry was having none of it. The kickbacks ban was ditched before the text was even proposed, after a majority of EU governments, keen to protect their domestic finance players and under pressure from Wall Street giants, opposed it.Under Thursday’s deal, firms and advisers will have to check if a kickback leads to a “tangible benefit” for the client and publish its price separately from other fees. And rather than conforming to public EU-wide value benchmarks, most investment firms will compare their products with those offered by their peers.Allowing kickbacks is “fundamentally wrong,” CEPS’ Lannoo said. The practice “doesn’t give the transparency and above all the competition in the markets” to make investing in funds attractive long term, he said.From theory to realityAs the consumer protection measures were dialed down, negotiators sought to highlight wins linked to other EU political goals around “competitiveness” or “simplification.”Danish Minister for Economic Affairs Stephanie Lose said the deal will “provide a welcome boost in terms of the EU financial market’s contribution to our overall competitiveness” and would contribute to “the simplification of financial services regulation.” Lead lawmaker Stéphanie Yon-Courtin said the deal moves the EU’s markets plan “from theory to reality.”But others aren’t convinced. “Eliminating kickbacks altogether would have been more effective in delivering fair financial advice for consumers and much less difficult to do,” Consumer NGO BEUC said.And for all of its lobbying wins, the industry still isn’t happy. Asset management lobby group ICI said it welcomed the move “away from rigid cost and performance benchmarks,” but argued that the peer-group testing of products’ value for money “risks simply becoming a burdensome box-ticking exercise.”Financial Services Commissioner Maria Luís Albuquerque has defended the plan, telling POLITICO last month that “it’s not so much about how many fees you charge, it is how much does the investor get after paying the fees, because that’s actually what matters.”