EU Push For Simple Savings Product Threatens UCITS Brand
January 20, 2025
If EU policymakers agree on one thing, it is that Europeans do not invest enough. EU consumers leaving their savings languishing in bank accounts is blamed for the moribund state of European capital markets and the bloc’s growing wealth gap with the US.
But a solution may be in the works. What Europeans need, runs the refrain through a raft of EU policy papers, summits and conferences over the past 12 months, is a “simple product” that allows savers to invest more easily in capital markets…
Yet this regulatory push is causing alarm among asset managers, who fear that, if mishandled, such a move could end up undermining the EU fund industry’s greatest success story – Ucits funds.
Meanwhile, fund executives fear that efforts to create a tax incentivised product, rather than simply a wrapper, could meet the same fate as the Pan-European Personal Pension Product…
The Pepp was launched to great fanfare several years ago but so far only one provider – a Slovakian robo-adviser called Finax – has launched one.
Experts said taxation has been a key stumbling block for the Pepp as countries including Germany and Austria do not grant Pepp savers the same tax incentives they would receive for investing in a local pension product.
Michael Pedroni, CEO of regulatory consultancy Highland Global Advisors, said the Pepp had faced “lots of issues” and remained unappealing to investors and asset managers.
“Creating a product that is tax deferred is not as good as giving the tax benefit to the account,” he said.