What has happened to the RIS Directive?

The RIS Directive would have amended five key pieces of EU financial services legislation: UCITS, AIFMD, MiFID II, IDD and Solvency II.

For the funds industry, one of its most significant features was a new, more prescriptive framework for undue costs and value for money (“VfM”). As we outlined in our July briefing (EU Retail Investment Strategy: Key impacts for fund managers | Arthur Cox LLP), UCITS management companies and AIFMs would have been required to establish formal VfM processes for relevant retail-facing funds, including peer-group comparisons of costs and performance. The framework also included annual undue-costs assessments for all funds, reimbursement of investors where undue costs were identified, enhanced oversight and additional regulatory reporting.

The RIS Directive contained significant changes to inducements, marketing communications and practices, suitability and appropriateness requirements and MiFID II client categorisation.

Political and industry context

The result is particularly notable because the Parliament’s ECON Committee had approved the politically agreed text in June 2026 by 33 votes to 23, with two abstentions, following the agreement reached between Parliament and Council in December 2025.

The precise political dynamics behind the plenary defeat are still emerging. However, concerns had been raised in advance of the vote regarding the complexity and regulatory burden associated with the final compromise. The RIS Directive had remained politically contentious throughout its development, particularly around inducements, notwithstanding that the original ban proposed on inducements for execution-only business was ultimately removed.

On 4 November 2026, the European Fund and Asset Management Association (“EFAMA”) published an open letter expressly calling on MEPs to vote against the final RIS text. EFAMA argued that the compromise fell short of the RIS’s objectives, remained heavily dependent on Level 2 measures, added regulatory complexity and legal uncertainty, risked further fragmentation of the EU Single Market and could adversely affect EU competitiveness. In particular, it criticised the new VfM assessments, inducement test and additional reporting requirements.

The RIS Directive’s future is uncertain. It remains to be seen whether the RIS Directive can be revived through targeted amendments or whether more substantive renegotiation with the Council will be required.

Any delay to the RIS Directive does not remove fund managers’ existing obligations to prevent undue costs from being charged to funds and their investors. Firms should therefore distinguish planning for the proposed new framework from compliance with their current obligations.

PRIIPs reforms remain on track

Importantly, the Parliament approved the separate regulation amending the PRIIPs Regulation (Regulation (EU) No 1286/2014) (the “PRIIPs Amending Regulation”). This should proceed towards formal Council adoption and publication in the Official Journal, independently of the rejected RIS Directive.

For fund managers producing PRIIPs Key Information Documents (“KIDs”), the approved reforms include several significant changes:

• New “Product at a Glance” section: KIDs will contain a prominent standardised dashboard summarising key product information, including the product type, summary risk indicator, total costs, and recommended holding period.
• Digital and layered KIDs: electronic delivery will become the default, while investors may request a paper copy free of charge. KIDs may use a layered digital format, with the new dashboard forming the first layer.
• Machine-readable KIDs and ESAP: KIDs will be required to be machine-readable and provided in a data-extractable format, within the European Single Access Point (“ESAP”) framework. Managers should assess these requirements alongside the separate ESAP submission requirements for PRIIPs KIDs scheduled to apply from 10 January 2028.
• Performance information: the reforms revise the framework for presenting performance information. The European Supervisory Authorities (“ESAs”) will develop revised regulatory technical standards (“RTS”) to promote consistency and comparability, including through performance scenarios which may, where relevant, be combined with past-performance information.
• Updating KIDs: the obligation to maintain a KID will cease once the relevant fund, sub-fund or share class, as applicable, is no longer open to new subscriptions or otherwise available for purchase by retail investors, including on a secondary market where relevant.

What happens next?

Attention will now turn to the EU institutions’ response to the rejection of the RIS Directive. Separately, the PRIIPs Amending Regulation should now progress through the remaining formal adoption steps. Under the approved text, the principal amendments would apply 30 months after entry into force, with specified provisions applying immediately. The ESAs will be required to submit the principal draft RTS to the Commission within one year of entry into force. The final application timetable will depend on completion of adoption and publication in the Official Journal.

Existing PRIIPs KID requirements will therefore continue to apply in the meantime. Fund managers do not need to amend their KIDs at this stage but should begin considering the operational implications of the new dashboard, digital presentation and machine-readability requirements.

If you would like to discuss any aspect of the RIS further, please contact your usual Arthur Cox contact.