In an article in the Financial Times, BETTER FINANCE takes issue with the new Key Investor Document (KID). By allowing investment product providers to use forecasts of future returns to tempt retail investors, the new regulation, expected to enter into force in 2016, is deemed a “potential catastrophe”.
BETTER FINANCE had made great efforts to include past returns in the range of performance scenarios available for European investment funds and products, jointly classified as packaged retail investment and insurance-based investment products (Priips). The KID comes as “a shock” since “European citizens will not know whether investment products they are considering buying have lost money in the past”, added Guillaume Prache, Managing Director of BETTER FINANCE.
Similar concerns were already raised by ESMA, the European Securities and Markets Stakeholder Group, in a warning published in September: individual investors will be forced to rely on performance data that, once based on future performance scenarios instead of historic performance figures, might prove to be misleading.
Please find the article here.