Delaying Priips by one year to 2018 might not be enough to guarantee clarity on its drafted regulatory technical standards, says Syed Kamall, the European Conservatives and Reformists chairman and London MEP.
Kamall, who is among the leaders of the objection process on the re-draft of the RTS within the legislation, told Money Marketing sister title Fund Strategy: “A delay in Priips legislation would hopefully mean certainty for Priips providers, financial advisers and most importantly investors.
“This cannot be achieved by simply delaying the implementation of this legislation but by making vital, accurate changes to the RTS as currently drafted.
“The Parliament was very direct during its scrutiny period, outlining the flaws in the original drafting and providing the Commission with clear indications as to our main concerns.”
Fund Strategy revealed in October the European Commission has decided to delay the introduction of regulation for Priips by one year to 2018.
The Commission is understood to have announced a 12-month delay of the rules in a meeting with a Council Working Group and is expected to publicly reveal its decision this Wednesday, 9 November.
The news follows the European Parliament vote in September to reject the European Commission’s draft RTS on Priips related to the presentation and content of the Key Information Documents.
MEPs, echoing many fund groups, called the standards “so flawed and misleading that it could actually lose [retail investors] money”.
Among the main objections to the Commission’s draft rules were the lack of 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.
At the time of the vote, Kamall said MEPs were not rejecting the principles behind the “rushed regulation” but are urging for more clarity and accuracy on the guidance.
He says: “The work we have done recently on this legislation was not about guaranteeing a delay. We wanted to highlight the issues with the content of these RTS, not simply the timeframe given to make these changes.
“Nevertheless, I would hope that the Commission considers the practicalities and needs of the industry affected. The most important thing is that investors get an accurate and reliable product, an aim that should supersede all desire to meet a deadline.”
The delay to Priips until January 2018 means it will align with Mifid II, which was also recently delayed by one year to allow firms to build data reporting systems.
Kamall says a “domino effect” when it comes to EU legislations’ changes and delays after the financial crisis is not something new.
He says: “With so much EU legislation post-crisis, we often find ourselves part of an almost ‘domino effect’ where when one piece of legislation is agreed, it becomes clear that another will have to be amended in order to ensure compatibility or remove new inconsistencies. with that in mind I am always in favour a considering a more horizontal approach to regulation.”