Although concerns about the reliability of KID performance scenarios have been the most headline-grabbing element of the PRIIPs regime so far, it has many other significant flaws which the ESAs’ recent consultation fails to mention at all.
PIMFA’s view is that retail investors should not be provided – as a matter of regulatory requirement - with product information that is, at best, unhelpful and, at worst, misleading. Consequently, we are calling for the application of the PRIIPs regime to be suspended until such time as a full and thorough review is completed and a more informative, fit-for-purpose regime that both consumers and industry can have confidence in can take its place.
PIMFA considers that Monday’s vote by the European Parliament’s Economic and Monetary Affairs Committee to extend UCITS’ exemption from the PRIIPs regime by 2 years to 31 December 2021 and to set a new deadline of 31 December 2019 for the European
Commission to complete its review of the PRIIPs Regulation paves the way for such an approach. It also signals a wider recognition that piecemeal amendments of the type proposed by the ESAs are not the way forward.
Liz Field, PIMFA’s CEO, said “We believe that the ESAs’ consultation exercise is misconceived, a “sticking plaster” that can neither hide nor address the fundamental flaws of the regime as a whole. Virtually every aspect of the PRIIPs regime – scope, risk indicators, cost disclosures, access to third country products – is problematic and the ESAs’ targeted review looking only at performance scenarios fails to acknowledge or address this."
"An immediate suspension of the PRIIPs regime would have multiple benefits – it would prevent investors from being misinformed by regulatory disclosures, it would save industry from spending time and money on ill-considered quick-fixes that do not work, it would provide time for a thorough-going review of all aspects of the regime and it would enable a fresh start at some future point that regulators, industry and investors alike could support.”
PIMFA’s response to the ESAs’ “Joint Consultation Paper concerning amendments to the PRIIPs KID” can be found here.
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