Investment should be encouraged with effective solutions, not regulation – The European savings and investments account would draw on member states’ best practices

The European Commission is drafting a proposal for the creation of a European savings and investments account (SIA). The SIA blueprint would draw on the best practices of existing national systems and serve as a model that enables member states to develop their own solutions.

The Commission’s SIA design draws a considerable amount of inspiration from Nordic models, especially from the Swedish investment savings account and the Finnish equity savings account. Finance Finland’s Head of Investor Protection Terhi Valtonen commends the Commission’s aim to make investing easier to approach.

“It’s important to ensure that existing national systems aren’t changed through binding regulation ‒ the SIA model must remain a recommendation that combines the best and most effective practices.”

One of the EU’s strategic objectives is to improve the financial literacy of its citizens. Valtonen approves of the Commission’s aim to promote this objective by making investing more accessible.

“Interest rates, yield percentages and other abstract concepts become easier to grasp when you have your own investments to track. Investment should be encouraged with a wide array of means.”

Unchained investment

Products that are similar to the proposed savings and investments account are already in the market in EU member states. In Finance Finland’s opinion, many of them contain problematic restrictions for example on what types of investments and investment time frames they allow. Finance Finland is unimpressed also by the Commission’s idea to channel SIA assets into specific investments in order to fulfil the EU’s strategic objectives.

“The range of investment options must be kept as broad as possible. That will also enable better diversification”, Valtonen points out.

There are many effective features in the existing Nordic investment accounts, which the Commission would be wise to include in the SIA blueprint.

“Investments should not have a maximum limit at all, or the limit should at least be as high as possible. Neither must the selection of acceptable investments be restricted, geographically or otherwise. The investment time frame must be flexible, and the taxation of the savings and investments must incentivise investment and be easy to understand.”

Valtonen highlights that the Commission’s model should be exactly that – a model and a recommendation. The existing national systems have been built to meet the needs and conditions of individual member states and must not be altered with binding regulation.

“Promoting EU investment does not require regulation – it requires will and an encouraging climate. The European savings and investments account is a good initiative in this respect.”

Experiences from the Nordic markets demonstrate that savings and investments accounts (SIAs) can help unlock the investment potential of retail savings. Therefore, the Nordic financial sector supports the European Commission’s proposal to create 
a European blueprint for SIAs, provided that the SIAs are designed and implemented  at the member state level.

The financial sector in the Nordic countries recommends that the European Commission base its blueprint on the principles and best practices listed in the joint Nordic input paper, drawn on the basis of experiences in the Nordic financial markets.