EIOPA publishes results of its first mystery shopping exercise

RegCORE Client Alert | Insurance Union

QuickTake

On 17 June 2025, the European Insurance and Occupational Pensions Authority (EIOPA) released its inaugural report on a coordinated mystery shopping exercise examining the sales process for Insurance-Based Investment Products (IBIPs) across eight EU Member States.Available here.Show Footnote This truly pan-European exercise, conducted in collaboration with National Competent Authorities (NCAs), assessed how distributors collect consumer information, disclose product details and ensure product suitability.

EIOPA’s findings are primarily based on shoppers’ perceptions of the sales process, who were asked to provide feedback through standardised questionnaires covering the following aspects:

• the information gathering practices of distributors; and
• their provision of information to shoppers regarding the costs and risks of a product, including the provision of mandatory documents (the key information document (KID) and sustainability disclosures).

EIOPA and the participating NCAs then assessed whether the products discussed were consistent with the shoppers’ profiles.

As explored in this Client Alert, EIOPA’s findings provide a diagnostic snapshot of current market practices, highlighting both strengths and areas for improvement in the distribution of IBIP and will inform future supervisory and policy initiatives aimed at enhancing consumer outcomes. EIOPA’s findings also are telling in how it and NCAs will continue to use mystery shopping, a still relatively new supervisory tool, to gather intelligence both for regulatory policymaking as well as supervisory engagement purposes.Further Client Alerts on mystery shopping, as used by the European Supervisory Authorities (ESAs) as well as NCAs are available from our EU RegCORE.Show Footnote

Key takeaways from EIOPA’s findings

EIOPA’s mystery shopping exercise covered 454 valid visits across eight diverse EU markets, focusing on the most relevant distribution channels and undertakings representing at least 35% of gross written premium in each market. The assessment centred on three core questions: (1) whether distributors adequately assess consumer needs, (2) whether they provide transparent and timely disclosures, and (3) whether the products offered are consistent with consumer objectives. So how did the assessment turn out?

1.   Information gathering during the sales process

• Distributors generally assessed shoppers’ investment horizons, with 74% of visits involving questions about the ability to hold the product for the recommended period.
• However, only 45% of visits included systematic assessment of risk tolerance and the ability to bear losses in case of early surrender.
• Sustainability preferences were not routinely addressed; in 60% of visits, distributors did not inquire about these preferences, and when raised by shoppers, half reported that distributors lacked sufficient knowledge on sustainability aspects.
• While most distributors asked about saving capacity, income, and employment status, fewer inquired about current assets and liabilities.

These findings will have the following implications for firms:

• IDD and suitability: The Insurance Distribution Directive (IDD)Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution.Show Footnote requires firms to obtain sufficient information to ensure products are suitable and meet the customer’s demands and needs. The patchy assessment of risk tolerance and loss-bearing capacity suggests potential gaps in compliance, especially for advised sales.
• Sustainability preferences: Since August 2022, under the amended Delegated Regulation (EU) 2017/2359, firms must integrate sustainability preferences into suitability assessments for advised sales. The report’s findings indicate a need for urgent improvement in this area.
• Documentation and record-keeping: Firms should review their fact-finding processes and ensure robust, documented procedures for gathering all relevant client information, including sustainability preferences.

2.   Disclosure and transparency

• Information on returns, risks, and holding periods was generally provided (70% of visits), but detailed cost explanations were less common (45%).
• Only 36% of shoppers received the KID, and 18% of those with sustainability preferences received relevant sustainability disclosures.
• There was a positive correlation between the provision of disclosures (such as the KID) and shoppers’ self-reported understanding of the products, though the overall rate of documentation provision was limited, partly due to the visits ending before purchase completion.

These findings have the following implications for firms:

• PRIIPs Regulation: The Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation requires provision of the KID before the conclusion of a contract. The low rate of KID provision, even accounting for incomplete sales, is a red flag.
• Cost transparency: The IDD and PRIIPs require clear, comprehensive disclosure of all costs and charges. Firms should review their sales scripts and training to ensure cost disclosures are not overlooked or downplayed.
• Sustainability disclosures: Under the Sustainable Finance Disclosure Regulation (SFDR)Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sectorShow Footnote, firms must provide pre-contractual disclosures on sustainability. The low rate of such disclosures to interested clients suggests a compliance risk.

3.   Product consistency with consumer needs

• In 84% of cases, products offered were consistent with at least one of the pre-identified consumer needs or objectives.
• Consistency was highest for sustainability preferences and recommended holding periods, but lower for investment objectives and risk profiles.
• Notably, 25% of products offered had a risk indicator considered inconsistent with the shoppers’ medium-high risk aversion and low financial education.
• Distributors offered products inconsistent with sustainability preferences in only 14.6% of cases for shoppers who expressed such preferences.

Further insights into drivers of consumer outcomes include:

• The comprehensiveness of information gathering showed only a very weak correlation with the consistency of product offerings to consumer needs.
• No correlation was found between the perception of receiving detailed advice or the duration of the sales visit and positive consumer outcomes.
• The findings suggest that even when formal advice processes are not followed, or when less time is spent, products may still align with consumer profiles, and vice versa.

The following implications might also be relevant for firms:

• Advice vs. execution-only: Firms must clearly distinguish between advised and non-advised sales, both in process and in client communications. Misleading clients about the nature of the service provided is a serious conduct risk.
• Documentation: Where advice is given, a written summary is often required. Firms should audit their processes to ensure compliance and avoid regulatory breaches.
• Product governance: Under IDD and the Product Oversight and Governance (POG) requirements, firms must ensure products are distributed to the right target market. The findings suggest that, in practice, product selection may not always align with client profiles, especially regarding risk and sustainability.
• Suitability and appropriateness: Firms must ensure that suitability assessments are not a box-ticking exercise but genuinely drive product recommendations. The lack of correlation between information gathering and product suitability is concerning and may attract supervisory scrutiny.

EIOPA’s next steps and considerations for firms

EIOPA intends to leverage the results of this exercise to inform future supervisory and policy actions, including:

• Engaging with stakeholders and consumer associations to better understand the root causes of varying practices and outcomes.
• Coordinating with NCAs on targeted follow-up actions to address identified areas of concern.
• Using the evidence gathered to inform policy work aimed at simplifying the sales process and improving consumer outcomes, with a focus on outcome-based and proportionate approaches that reflect product complexity and distribution channel.

Firms should expect increased supervisory attention to the quality of sales processes, especially regarding suitability, disclosure and sustainability. EIOPA’s emphasis on outcome-focused and proportional approaches may lead to future regulatory changes. Firms should monitor developments and be prepared to adapt processes accordingly.

EIOPA’s mystery shopping exercise provides valuable insights into the real-world operation of IBIP sales processes. While many firms are broadly compliant, the report highlights significant areas for improvement, particularly in suitability assessments, disclosure, and the integration of sustainability preferences. Regulated firms should treat these findings as a call to action, reviewing and enhancing their processes to ensure robust compliance and positive consumer outcomes in an evolving regulatory landscape and consider how they can:

1. Review and enhance suitability assessments: Ensure all relevant client information, including risk tolerance, loss capacity, and sustainability preferences, is systematically collected and documented. Firms will want to consider regularly reviewing and updating client assessment templates to reflect evolving regulatory requirements, particularly regarding sustainability preferences under the amended Delegated Regulation (EU) 2017/2359.
2. Strengthen disclosure practices: Guarantee timely provision of KIDs, clear explanation of costs (in particular all direct and indirect charges associated with IBIPs) and appropriate sustainability disclosures.
3. Review product governance and target market alignment: Regularly review product offerings to ensure alignment with target market and client profiles, especially for risk and sustainability. Firms should strengthen product oversight and governance frameworks to ensure that products are only distributed to their intended target markets. Firms must also ensure they can evidence that they monitor and review product performance and client outcomes to identify and address any misalignments or emerging risks.
4. Clarify advice processes: Clearly communicate the nature of the service (advised vs. non-advised) and provide required documentation. Firms should - where advice is provided - ensure that a written summary of the advice and the rationale for product recommendations is given to the client, as required by local implementation of the IDD.
5. Step-up staff training: Invest in ongoing training to address identified weaknesses, particularly around sustainability and cost disclosures. Firms should establish regular monitoring and quality assurance checks, including mystery shopping or file reviews, to identify gaps in compliance and areas for improvement.

Firms should anticipate increased attention from EIOPA and NCAs on the quality of sales processes, especially in light of the findings from the mystery shopping exercise. A number of firms may want to step-up how they engage with regulatory developments and be prepared to adapt processes in response to new guidance or policy changes aimed at improving consumer outcomes. All firms should ensure they are able to document all compliance enhancements and be ready to demonstrate to regulators the steps taken to address identified weaknesses.

Outlook

This first coordinated mystery shopping exercise in the insurance sector provides valuable insights into the IBIP sales process and highlights the need for further improvements in disclosure, transparency, and the alignment of products with consumer needs. EIOPA’s findings will underpin ongoing efforts to enhance consumer protection and promote the uptake of suitable insurance-based investment products across the EU. Firms should anticipate further supervisory engagement and potential policy developments in this area.

About us

PwC Legal is assisting a number of financial services firms and market participants in forward planning for changes stemming from relevant related developments. We have assembled a multi-disciplinary and multijurisdictional team of sector experts to support clients navigate challenges and seize opportunities as well as to proactively engage with their market stakeholders and regulators.

Moreover, we have developed a number of RegTech and SupTech tools for supervised firms, including PwC Legal’s Rule Scanner tool, backed by a trusted set of managed solutions from PwC Legal Business Solutions, allowing for horizon scanning and risk mapping of all legislative and regulatory developments as well as sanctions and fines from more than 2,500 legislative and regulatory policymakers and other industry voices in over 170 jurisdictions impacting financial services firms and their business.

Equally, in leveraging our Rule Scanner technology, we offer a further solution for clients to digitise financial services firms’ relevant internal policies and procedures, create a comprehensive documentation inventory with an established documentation hierarchy and embedded glossary that has version control over a defined backward plus forward looking timeline to be able to ensure changes in one policy are carried through over to other policy and procedure documents, critical path dependencies are mapped and legislative and regulatory developments are flagged where these may require actions to be taken in such policies and procedures.

The PwC Legal Team behind Rule Scanner are proud recipients of ALM Law.com’s coveted “2024 Disruptive Technology of the Year Award” as well as the “2025 Regulatory, Governance and Compliance Technology Award”.

If you would like to discuss any of the developments mentioned above, or how they may affect your business more generally, please contact any of our key contacts or PwC Legal’s RegCORE Team via de_regcore@pwc.com or our website.