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MEPs consider extending Kiid to shares, bonds and bank accounts

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MEPs are considering forcing firms selling ordinary shares, bonds or bank accounts to use the key investor information document in a major expansion of the Prips directive.

Prips intends to increase transparency for investors by reforming the Kiid for retail investment products and creating a standardised European information sheet.

The economic and monetary affairs committee is expected to vote on an agreed text on 27 May with a full European parliament vote to take place next month.

The Investment Management Association says using the Kiid for ordinary shares and bonds would be a “logistical nightmare” and more transparency can be acheived through its existing simplified prospectus.

IMA director of authorised funds and tax Julie Patterson says: “If you had the Kiid for every share then any ordinary company that has listed equity would suddenly be caught in a regulation designed for financial services firms. Who would regulate it? It is a bit crazy.

“It would be a logistical nightmare because how would you write one document to cover quite different things and how would you enforce it?”

Some MEPs argue that using the Kiid only for certain products would wrongly give investors the impression they are a safer option. They add issuing a Kiid for bank accounts would allow depositors to better understand what happens to their money.

But Conservative MEP and shadow rapporteur Syed Kamall says: “How can you have a document that is useful for both retail investment products and shares and bonds? Let’s make sure we get the Kiid right for what it is intended for, which is retail products instead of it being extended into shares or bonds.”

Lansons Communications director Richard Hobbs says: “The proposal to include simple instruments is ill-thought-out and would cause dislocation.”

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. Julian Bradshaw 8th May 2013 at 3:20 pm

    If MEP’s were to ask either the general public or the Advisers who have to hand them out, they would realise they are already a waste of paper in the majority of instances and clients would be better served by a fund manager factsheet or personalised Key Features documents from the provider or platform they use. The risk ratings are often inaccurate or based on “similar funds” and charges do not reflect the actual charges applying to that client. My clients would like less paper, not more.

  2. Soren Lorenson 8th May 2013 at 3:26 pm

    Whatever the merits of this latest idea (and I suspect they are few) let’s have a few years of no rule changes to see whether we can make the latest set of rule changes work.

    Maybe if the FS profession could dedicate its time to servicing its clients rather than jumping to the whim of every pointless, clueless, regulator we could see things like profitability, trust and customer satisfaction return.

    Perhaps after the massive change of RDR regulators could give the new rules, maybe 5 years to settle down before introducing anything new. How novel.

    Just a thought…

  3. Obviously MEPs are struggling to justify their salaries.

  4. KiiD’s are a waste of paper and I spend most of my time explaining to clients that what they’re reading doesn’t apply to them. Bid offer spread etc. The risk indicators also mean nothing. The most conservative funds available are never less than three and equity funds normally come out as five or six.Meaningless.

  5. Simon Mansell 8th May 2013 at 4:45 pm

    The great unwashed “NEVER” read a book, a quality newspaper or news. In short they have the attention span of a Mayfly. So what make anyone think KiiD’s will ever be read or understood. And if they are understand then it will be understood that they don’t apply.

  6. Idiots – if we could get rid of them for advised sales, we would help clients enormously. The benefits would include allowing us to focus the client’s minds on the risks and warnings. KIIDs just take up too much room, distract attention and achieve nothing.

  7. With auto enrolment of pensions, the assumption is that the individual is not illiterate, blind or speak another language.

  8. If we must have these then at least can we have them printed on soft absorbent tissue?

    These people obviously don’t invest, for if they did they would know that the only things investors want to know about a share are. PE Ratio. Dividend record. Profit on turnover, a good idea of the main movers (CEO, FD etc.). What exactly the firm does and how long it has been doing it. The state of the order book and any possible risks (including daft bureaucrats) that might spoil the party. Bet none of that would be in a KIID.

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