Retail investors will have more opportunities to put their money to work and remove barriers to pension investments, a Green Paper from the European Commission has proposed.
The 28-page Green Paper: Building a Capital Markets Union, came as the EC launched its consultation into proposals which, according to the paper, would boost growth by removing barriers to cross-border investment.
British commissioner Lord Hill, who is responsible for financial stability and financial services, said: “The direction we need to take is clear: to build a single market for capital from the bottom up, identifying barriers and knocking them down one by one.”
The paper also said proposals for a revised directive on institutions for occupational retirement provision could remove barriers to pension schemes investing more in long-term assets.
The paper highlighted that retail investors across the EU generally prefer institutional investments, but it suggested declining deposit rates could convince households to shift more of their financial wealth from banks into market securities.
It said: “Retail investors will only be attracted to invest in capital markets if they trust them as well as the financial intermediaries operating in them, and believe they can safely secure a better return on their savings.
“Enhancing cross-border competition in retail financial services could bring greater choice, lower prices and better services.”
According to the EC, financial intermediaries would benefit from more competitive, well regulated and integrated EU capital markets with greater scale and depth.
Liz Field, the chief executive of the Wealth Management Association, welcomed the Green Paper but warned that retail investors must lie at the heart of any capital markets union.
She said: “The creation of the Capital Markets Union is a real opportunity to boost economic growth in Europe.”
| Timetable |
The consultation will run until 13 May and the commission is expected to publish more concrete details later this year. The EU is planning to put in place a capital markets union by 2019. |
Adviser view
Alan Solomons, director of Middlesex-based Alpha Investments & Financial Planning, said: “It is up to the individual where they invest, but most people don’t have the knowledge to select stocks and shares. It may be more attractive if you have a financial adviser but most IFAs are not advising directly managed shares, they may direct people to a DFM.”