The European Digital Finance Association (EDFA) has published its latest Position Paper in response to ESMA’s consultation on the retail investor journey. The document reflects the collective voice of FinTech associations and crowdfunding platforms across Europe, calling for smarter regulation, broader access, and stronger protection for individual investors in capital markets.
Core Principles Advocated by EDFA
- Consumer-Centric Safeguards: Platforms must ensure transparent risk disclosure, clear fee structures, and efficient complaint-handling processes.
- Financial Inclusion: Technology should lower entry barriers, allowing a more diverse investor base to participate.
- Interactive Financial Literacy: Educational tools and simulations can help investors navigate risks and make informed decisions.
- Smarter Diversification: FinTech platforms should guide users toward balanced portfolios through data-driven tools and analytics.
Challenges Identified
- Lack of trust in financial service providers.
- Fragmented regulation (e.g. MiFID II, ECSP) and complex onboarding procedures.
- Influence of finfluencers leading investors toward risky, commission-driven products.
- Limited digital integration and language accessibility across platforms.
Strategic Recommendations
- Simplify onboarding using EU-wide e-ID and e-KYC tools.
- Introduce multilingual, mobile-friendly disclosure templates.
- Develop tax-deferral and co-investment schemes to boost participation.
- Establish trust labels for digital financial products to improve transparency.
- Promote inclusive sandboxes and uniform APIs to fast-track innovation.
EDFA calls on ESMA and EU policymakers to reshape the retail investing landscape—making it more inclusive, secure, and digitally native, without compromising on consumer protection.