The current EU legislation for investment funds (the UCITS Directive) has been the basis for an integrated market facilitating the cross-border offer of collective investment funds. But more can be done as new challenges lie ahead: the enhancement of the EU-framework for collective investments could be a significant contribution to European economic reform in the run-up to 2010. The Commission has set out its vision for the modernisation of this framework in a White Paper.
As a follow-up, the Commission adopted on 16 July 2008 a legislative proposal for a recast of the 1985 UCITS Directive. The changes proposed by the Commission will simplify the UCITS Directive in order to ensure that investors receive useful cost and performance disclosures when selecting funds, and to make it easier for the industry to achieve cost savings and specialisation benefit across the single market.
Beyond the need to modify the UCITS Directive, the White Paper also identified areas where further investigation and ground work by the Commission is needed. This work particularly concerned some investment funds which are considered in several Member States as suitable for retail investors but propose investments policies which do not comply with the rules of the UCITS Directive: non-harmonised retail funds. The issue of private placement — the possibility to distribute certain investments products to specific categories of investors without having to comply with certain investor protection rules — is also under consideration.
Finally, the Commission has launched in-depth work of analysis of the rules on product disclosure and distribution of comparable retail investment products, to ensure a coherent approach to investor protection for all relevant investment products.