European lawmakers have reached an agreement on a recent strategy designed to bolster investor protections within the financial sector. The deal, reached on March 18, 2026, marks a significant step toward reforming the European framework for distributing financial products. The agreement, finalized in “trilogue” discussions involving the European Parliament and the Council, introduces key changes to existing regulations, including MiFID II and the IDD (Insurance Distribution Directive).
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The agreement, announced on March 20, 2026, focuses on areas such as incentives, value for money, and ensuring the best interests of retail investors when accessing financial services like advice. Formal approval from both the European Parliament and the Council is still needed before the text is officially published in the Official Journal of the European Union.
Key changes within the agreement include a new “inducement test” designed to strengthen the management of conflicts of interest related to receiving commissions or other benefits. According to the finalized text, any incentives offered must demonstrably benefit the client, be proportional to the value of the product or service, be based on a clear and transparent methodology, and avoid rewarding sales volume or value. The agreement also requires that incentives be clearly identified separately from other fees or commissions.
These changes aim to increase confidence in capital markets and encourage greater participation in financial investments among European citizens. The updated regulations are expected to impact how financial products are distributed and how advisors are compensated, ultimately prioritizing the needs of the individual investor.
The Retail Investment Strategy (RIS) builds upon proposals initially presented by the European Commission on May 24, 2023, seeking to enhance investor confidence and channel savings into capital markets. The RIS amends several existing directives, including those related to undertakings for collective investment in transferable securities (UCITS), insurance and reinsurance (Solvency II), alternative investment fund managers (AIFM), markets in financial instruments (MiFID), and insurance distribution (IDD).
A deal was initially reached on December 18, 2025, paving the way for the final agreement announced this month.
