Advice and wealth management trade body Pimfa has joined the Investment Association and an FCA working group in calls for a review of new Priips rules.
In a statement, Pimfa says concerns expressed before the rules came into force on 1 January about flaws in the design of the key information documents have now been realised.
The statement says: “Over recent weeks, product manufacturers, wealth managers, financial advisers and industry commentators have drawn attention to instances where the calculation methods mandated by the Priips regulation result in product risk and performance data that is not fit for purpose – information that is anything but ‘clear, fair and not misleading’ and that does nothing to help investors compare different products or to make properly informed investment decisions.”
The Investment Association has already called for an “urgent” review of the new KID saying it was potentially misleading to clients.
That call was echoed by the FCA working group tasked with creating a transparent costs disclosure template, which said Priips’ language “may not improve comparability” of funds, especially in the way it describes how a fund is managed.
Pimfa wants an “urgent review” of the regulation as well asking the FCA to clarify its 24 January statement that said advisers could address potentially misleading statements by providing additional information to investors.
Pimfa chief executive Liz Field says: “In instances where KIDs provide misleading information – regardless of product providers’ compliance with detailed KID content requirements – advisers and distributors should not be expected to ‘paper over the cracks’ by providing ‘additional explanation’ to investors.”
Field adds: “The ad hoc correction of documents that are a matter of regulatory requirement should not be undertaken lightly – as well as creating further inconsistencies in the way individual products are presented to investors, such an approach may result in wholly unreasonable liabilities for advisers and distributors.”