ESMA Flags Rising Complaints as Cross-Border Retail Investing Accelerates Across Europe
Cross-border investment services in the European Union and European Economic Area expanded sharply in 2024, with a surge in retail participation accompanied by a notable increase in complaints, according to a new report from the European Securities and Markets Authority (ESMA). The findings highlight both the growing appeal of passported investment services and the supervisory challenges emerging as firms scale rapidly across borders.
The annual ESMA review draws on data collected from national competent authorities across 30 EU and EEA jurisdictions and focuses on firms operating under the “freedom to provide services” regime. While the number of services declined slightly year-on-year, the overall footprint of those firms expanded significantly, underscoring a shift toward larger, more concentrated platforms serving clients across multiple markets.
ESMA said the report is intended to strengthen supervisory oversight and investor protection by providing regulators with a clearer picture of how cross-border investment services are evolving, where risks are emerging, and how retail investors are interacting with firms based outside their home countries.
Client Growth Outpaces Firm Numbers
In 2024, 370 firms provided cross-border investment across the EU and EEA, down from 386 firms in the previous year. Despite this decline, the number of retail clients served on a cross-border basis rose to approximately 10.5 million, representing a 32% increase year-on-year.
The market remains highly concentrated. Firms based in Cyprus, Lithuania, Germany, and Ireland accounted for roughly 86% of all cross-border retail clients, even though they represented just over one-third of the total number of firms. Cyprus alone accounted for more than 3.6 million cross-border retail clients, while Lithuania saw especially rapid growth, with client numbers more than doubling compared to 2023.
From a destination perspective, Germany, France, Spain, and Italy were the largest host markets, collectively accounting for more than half of all cross-border retail clients. On average, each firm served around 28,000 retail clients across borders, reflecting a steady increase in scale compared with the prior year.
Equities, Funds, and CFDs Dominate Cross-Border Demand
remain concentrated in a narrow range of products. Shares were the most commonly held instrument in 2024, accounting for approximately 36% of all cross-border retail clients, followed closely by UCITS funds at around 30%.
Contracts for difference (CFDs) represented roughly 11% of cross-border client holdings, while crypto-asset exposures offered by traditional investment firms under existing regulatory frameworks accounted for around 7%. Bonds remained the least popular product category, used by just 2% of cross-border retail clients.
ESMA noted that a significant proportion of equity exposure was held in fractional form, reflecting the growing role of digital platforms and app-based investing models. The product mix underscores the continued dominance of equity-based and fund products in retail cross-border activity, even as alternative instruments gain incremental traction.
Complaints Rise, But Risk Signals Remain Nuanced
Alongside rapid client growth, complaints related to cross-border investment services rose sharply in 2024. Firms reported a total of 10,968 complaints from cross-border retail clients, up 46% from the previous year. However, when adjusted for the larger client base, the increase appears more moderate.
On a relative basis, firms received an average of 104 complaints per 100,000 retail clients, up from 94 in 2023. ESMA cautioned that definitions of what constitutes a complaint may vary across firms and jurisdictions, meaning absolute figures should be interpreted carefully.
Germany-based firms accounted for the largest share of complaints, followed by firms in Lithuania and Ireland. From the client perspective, retail investors based in Austria, Spain, and Italy lodged the highest number of complaints. Across both home and host jurisdictions, the most common issues related to general administration and customer service, including account handling and custody, rather than specific market events or product suitability.
ESMA said the findings reinforce the need for close cooperation between home and host regulators, particularly as cross-border platforms continue to scale. The authority plans to continue the data collection exercise on an annual basis, using the results to inform supervisory convergence and across Europe.
