Retail investor protection and investor rights

In short: Retail investor protection covers statutory rules meant to protect private investors from dubious or overly risky offers. In Germany this is regulated, among other things, by the Retail Investor Protection Act.

In more detail: The background was several cases in which private investors suffered heavy losses through opaque products.

In detail

• Disclosure duties: Providers must clearly inform about the risks of certain financial products.
• Prospectus requirement: Many capital investments require a prospectus checked by the supervisory authority.
• Warning notices: Particularly risky products must be prominently marked.
• Right of withdrawal: A statutory right of withdrawal exists for certain forms of investment.
• BaFin: The Federal Financial Supervisory Authority monitors many financial market participants.
• Personal responsibility: Statutory protection does not replace one’s own review of offers and risks.
• Warning signs: Unrealistically high promised returns are a classic warning sign of dubious offers (risikostreuung-und-diversifikation).