EU regulator plans to simplify investing for retail users

The European Securities and Markets Authority (ESMA) recently published its takeaways from the 2025 Call for Evidence on the retail investor journey, outlining actions aimed at making it easier for retail investors to access suitable investment opportunities in EU capital markets.

The EU’s financial markets regulator said the conclusions were based on feedback from stakeholders across the financial sector, including market participants and consumer representatives.

According to ESMA, retail investors continue to face multiple regulatory and non-regulatory barriers when starting to invest, meaning there is no single solution that can make EU capital markets fully accessible to individuals.

The authority explained that it will prioritise three main areas of action to improve the retail investor experience, focusing on streamlining disclosure requirements, simplifying investment suitability assessments and reducing complexity in sustainability preference rules.

In particular, ESMA intends to work on tackling information overload for investors by improving the clarity and structure of disclosure requirements.

The regulator also plans to reduce complexity in suitability and appropriateness assessments, which are designed to ensure that investment products match investors’ needs and knowledge.

In addition, ESMA said it will simplify requirements under Markets in Financial Instruments Directive II (MiFID II) relating to sustainability preferences, which have been criticised by some stakeholders as overly complex.

As part of its follow-up work, ESMA said consumer testing will play a central role in improving disclosure formats and digital investment journeys, including those designed for mobile-first users.

“Enhancing the investor journey is one of ESMA’s flagship projects to facilitate simplification and reduce burden for participants in financial markets,” said ESMA chair Verena Ross.

“ESMA will take forward concrete work to make it easier for retail investors to participate in the EU capital markets,” Ross added.

“This work must remain a priority and requires ESMA to work in a joint effort with market participants, the European Commission, co-legislators and national governments to improve retail investor access,” said Ross.

The responses collected during the consultation process indicated that many retail investors encounter obstacles when trying to begin investing, both from regulatory frameworks and broader market conditions.

Stakeholders highlighted that investment disclosures are often too long, overly complex and not designed for digital use, which reduces their effectiveness for retail investors.

While respondents broadly supported the need for disclosures to protect investors, they said the current volume, complexity and fragmentation of information often makes it difficult for individuals to understand key investment details.

Stakeholders therefore called for clearer and layered information structures, with content presented in mobile-friendly formats that allow investors to access key details quickly.

Feedback also showed that suitability and appropriateness assessments are widely valued for their investor protection benefits, but respondents argued that the current framework can be excessively burdensome.

In particular, stakeholders suggested that simplification and proportionality should be introduced, especially for simple investment products and those distributed through digital channels.

Many respondents also expressed the view that the integration of sustainability preferences into these assessments has introduced additional complexity, which may discourage retail investors from participating in financial markets.

Beyond regulatory issues, the consultation also highlighted several structural and behavioural barriers that affect retail investment participation in Europe.

Respondents pointed to a lack of trust in financial markets, high fees, limited comparability between investment products and low levels of financial literacy as key challenges.

They also highlighted cultural factors and complex tax rules, particularly in relation to cross-border investments, as additional obstacles faced by retail investors.

ESMA said the findings will inform its future technical advice on delegated acts under MiFID II, as well as potential updates to its regulatory guidelines.

The regulator added that this work will ensure alignment with the final outcome of the EU’s Retail Investment Strategy, which aims to improve access to capital markets for individual investors across the European Union.