European Parliament rejects directive, halting (for now) tighter rules on fund costs

The European Parliament rejected the Retail Investment Strategy (RIS) Omnibus Directive on Thursday, 12 November, the package that would have introduced a value-for-money test for the costs of investment products aimed at retail clients. The text, resulting from the provisional agreement with the Council on 18 December 2025, was rejected by 300 votes to 286, with 23 abstentions—a margin of just 14 votes. The regulation updating the PRIIPs KID, however, was approved by 311 votes to 261.

A surprise vote after three years of negotiations

The RIS was presented by the European Commission in May 2023. After the political agreement in December, its passage seemed assured: it was approved by the Member States in COREPER (5 June 2026) and by the ECON committee (23 June 2026, with 33 votes in favour, 23 against and 2 abstentions), with the support of the EPP, ECR, Renew and Patriots.

In plenary, however, the EPP was split: 34 EPP MEPs, most of them from the Polish delegation, voted against. Eight fewer defections would have been enough for the text to pass.

What the directive provided for on costs and incentives

The Omnibus Directive would have amended MiFID II, IDD, UCITS, AIFMD and Solvency II. The core of the reform was value for money: manufacturers and distributors would have had to identify and quantify all costs borne by investors and demonstrate that they were justified and proportionate compared with groups of comparable products (peer groups). For insurance-based investment products, supervisory benchmarks were envisaged, designed as a tool for authorities rather than as public comparators.

The text also tightened the rules on inducements: commissions paid back to distributors would have had to provide a tangible benefit to the client and be disclosed separately. The rules on suitability, client classification and marketing, including finfluencers, would also have changed.

The compromise was already much softer than the Commission’s original proposal, which envisaged European cost benchmarks as a preventive filter and a partial ban on inducements in execution-only services, both of which were removed by Parliament in 2024.

Reactions: the industry celebrates, consumers less so

For the asset management industry, the vote is seen as a victory. On 4 November, EFAMA Director General Tanguy van de Werve had written to MEPs asking them to reject the text: in his view, the RIS created duplicate requirements that were difficult to apply and offered no benefits to end investors, while the overlap between national and European value-for-money assessments would have fragmented the market.

Anasf and Fecif are calling for investor protection objectives to be preserved and for discussions on advice and distribution to be revived; Anasf President Luigi Conte insists that young investors should not be excluded from long-term solutions such as supplementary pension schemes.

What happens now? Three scenarios

The vote does not close the dossier: Parliament’s first reading remains open. According to finReg360, there are three possible scenarios:

1. Reopening negotiations with the Council (the most likely scenario): the file returns to ECON to identify the points of disagreement and draw up a new text to be brought back to plenary.
2. Amendments in plenary (less likely): a text differing from the agreement would require the Council to take a new position.
3. Withdrawal of the proposal by the Commission (unlikely, given the narrow margin).

A fourth possibility would be a targeted renegotiation, potentially as part of the Market Integration and Supervision Package. In any case, publication in the Official Journal, expected by January 2027 at the latest, will be delayed by several months. In the meantime, the current regulatory framework remains in force.