EUROPEAN efforts to create a single, liquid and transparent market for investors have fallen far short of the mark, according to the region’s top government regulator.

The European Court of Auditors, which monitors EU finances, said the creation of a single market more than three decades ago has aided transparency around risk, returns and fees. But “investors are still not adequately protected against various issues,” according to a report published late Monday.

These include “undue costs arising from opaque selling practices,” as well as “biased advice from financial intermediaries leading them toward products which are not well suited to their needs,” it said.

The European Union (EU) needs to make significant adjustments to the structures shaping its investment industry if it’s to address the shortcomings, according to the report.

“Minor revisions of the legal framework alone will not be sufficient to achieve a true single market,” it said. The recommendations will be reviewed by the European Parliament and the Council of the EU.

The report also looked at the extent to which investors have a reasonable chance of navigating the fast-growing market for environmental, social and governance (ESG) products. The EU last year enforced an anti-greenwash rulebook known as the Sustainable Finance Disclosure Regulation (SFDR) in an effort to protect investors. But according to Monday’s report, it’s unclear how effective SFDR has been.

“It’s too early to assess its impact,” the auditors wrote.

The report also warned of the lack of regulation surrounding ESG ratings and “other assessment tools,” noting that the European Securities and Markets Authority “has recently called for legislative action” in this area. (SD-Agencies)