The Fiat Chrysler Automobiles (FCA) emissions fraud has shone a light on the European Union’s “grossly inadequate” investor protection mechanisms, according to Better Finance, which is calling for a “level playing field” for all investors.

Better Finance is backing the Fiat Chrysler Investors Recovery Stichting (FCIRS), a Netherlands-based non-profit foundation, fighting for redress for investors that purchased FCA shares on the Milan Stock Exchange.

Between 2014 and 2017, Fiat Chrysler, which is now part of Stellantis, was embroiled in a scandal involving the installation of illegal software in its vehicles to manipulate emissions tests. These so-called ‘defeat devices’ enabled the company to pass regulatory tests while emitting pollutants far above legal limits under normal driving conditions.

As the truth about the emissions fraud emerged, FCA’s stock price plummeted, causing significant financial losses for shareholders, mirroring the earlier and widely publicised Volkswagen emissions case.

In response to these allegations, a class-action lawsuit was launched in the United States, where affected investors sought compensation for the financial damage they incurred due to Fiat Chrysler’s fraudulent activities. A USD 110m settlement was reached in 2019, ensuring that U.S.-based investors who had purchased FCA shares through American stock exchanges received appropriate financial redress.

“In stark contrast, investors who acquired FCA shares via the Milan stock exchange during the same period have not yet received compensation. Despite being equally misled and suffering financial harm, these European investors have faced significant obstacles in their pursuit of redress,” Better Finance stated.

To address this injustice, FCIRS is organising a collective action to hold FCA accountable and secure compensation for affected shareholders, working on a ‘no cure, no pay’ basis, meaning investors do not have to pay to join the action.

“This case highlights a broader and deeply concerning issue: the European Union’s investor protection mechanisms are grossly inadequate. The fact that American investors were compensated years ago while their European counterparts continue to wait for justice illustrates a fundamental imbalance,” Better Finance stated.

“Such disparities not only undermine confidence in European capital markets but also raise questions about their competitiveness. If investors face significantly weaker protections and greater difficulty obtaining redress in Europe compared to the United States, they may be deterred from investing in EU-listed companies. This, in turn, could lead to a long-term disadvantage for European financial markets, limiting their attractiveness and growth potential.”

Better Finance argued that the Fiat Chrysler case is a “prime example” of the urgent need for a more efficient and robust collective redress system within the EU, which includes redress for investors (so far excluded from EU initiatives on redress).

“We call on policymakers and regulators to take action to allow EU citizens as savers and investors the ability to better stand up for their rights. Only through meaningful reform can the EU create a truly competitive and fair capital market that inspires confidence among retail and institutional investors alike.”

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