Global Trustee and Fiduciary Services Bite-Sized Issue 7 2024

8 QUICK LINKS CBDC CYBERSECURITY DIVERSITY DORA FINTECH IOSCO MICA OPERATIONAL RESILIENCE PRIIPS RETAIL INVESTMENT PACKAGE SUSTAINABLE FINANCE/ ESG T+1 TOKENISATION ASIA EUROPE LUXEMBOURG NORTH AMERICA UNITED KINGDOM Global Trustee and Fiduciary Services Bite-Sized | Issue 7 | 2024 RETAIL INVESTMENT PACKAGE Retail Investment Package: Council Agrees on its Position On 12 June 2024, the EU Council announced that it had reached an agreement on strengthening the EU’s rules on retail investor protection. The retail investment package (the package) aims to support individual consumers who wish to invest on the EU’s capital markets, by better protecting their investments, providing themwith clearer information about investment products and ensuring more transparency and disclosure. The package aims to modernise and simplify investor protection rules so that they are coherent across the different sectors and EU laws. Main changes proposed by the EU Council Inducements – The EU Council has decided to remove the proposed ban on inducements received for execution-only sales. At the same time, to reinforce the prevention of potential conflicts of interest, the EU Council strengthened the safeguards accompanying all inducements with: • An inducement test that applies where there is no ban on inducements; • A new uniform test specifying the duty for advisors to act in the best interest of the client; and • Enhanced transparency and disclosure about what payments are considered as inducements, their costs, and their impact on investment returns. Value for money – The package introduces a new concept of ‘Value for Money’ to ensure that investment products are offered to retail clients only if they offer good value for money. Under the new rules, manufacturers and distributors would assess whether costs and charges related to a product are justified and proportionate as regards their performance, other benefits and characteristics, their objectives and, if relevant, their strategy. The EU Council agreed that ESMA and EIOPA would develop EU supervisory benchmarks. However, instead of mandatory benchmarks integrated in manufacturers’ and distributors’ product governance process, they would be a supervisory tool, developed in a way that helps national competent authorities detect investments products that fail to offer value for money. Since benchmarks used as supervisory tools would not be directly binding on manufacturers and distributors, the EU Council also agreed to strengthen their product governance process with a peer group system. The European Parliament agreed on its negotiating mandate on the Regulation amending PRIIPs on 11 April 2024 and on the Omnibus directive on 23 April 2024. The agreement by the EU Council paves the way to start inter-institutional negotiations (trilogues). Link to EU Council Press Release here SUSTAINABLE FINANCE/ESG Report: Long-termValue Creation in a ChangingWorld On 25 June 2024, the Principles for Responsible Investment (PRI) published a summary report, authored by the PRI, UN Environment Programme Finance Initiative (UNEP FI) and the Generation Foundation, concluding the implementation phase of the Legal Framework for Impact programme. The summary report identifies the reasons why sustainability outcomes are relevant for investors and contains excerpts of key findings from the 2021 Freshfields legal report. The report assesses the progress that has been made since 2019 to address sustainability outcomes in investment policy and practice, providing examples from the five jurisdictions in focus. It sets out key learnings and describes how to ensure investors are empowered to contribute to overcoming urgent sustainability challenges in service of, and alongside, the pursuit of financial returns for their clients and beneficiaries. Link to the Report here Link to Information on the Project here