MEPs and industry bodies are pushing for changes to key information documents under Priips in a bid to deliver greater transparency for retail investors.
A draft motion for resolution from the European Parliament’s Economic and Monetary Affairs committee, which will object to proposed regulatory technical standards for retail investors set by the EU Commission, is going to be discussed and voted on in Brussels today.
A European Parliament spokeswoman says there are two main objections to the Commission’s draft rules: the provision of information about past performance of funds in the KID and the question of whether the current proposals put different providers of Priip products on “an unequal footing”.
This is due to the way insurance products are categorised and how transaction costs are calculated.
In July, MEPs already objected to the rules as being misleading for investors.
A group of asset managers, including BlackRock and Schroders, have also written to the Commission asking to it rethink about excluding past performance data within the KIDs.
Wealth Management Association deputy chief executive John Barrass says: “There hasn’t been any occasion when the recommendations of the Econ committee have been turned down so I think their motion will go through.”
But if a revision of KID rules happens it would become impossible to implement the regulation on time because it will take several weeks or months before knowing the final outcome.
Overall, the WMA says the regulatory technical standards of Priips are not “well conceived” and should be re-examined to increase clarity for consumers, especially on costs disclosure.
Barrass says: “We now have the cost disclosure requirement of Mifid and the one of Priips, substantially with similar language but there are variations. This means you’ll be presenting two sets of costs statements on the same product.
“There must be clarity of what [the documents] are required to say, which means there must be summary costs, not detailed compound interest costs as most clients don’t understand compound interest.”