On Monday 27 March, the ECON Committee of the European Parliament voted on an early non-objection of the delegated act for the implementation of the PRIIPs (Key Information Documents for Packaged Retail and Insurance-based products) which should enter into force in January 2018 (initially scheduled for January 2017).
Sven Giegold, Member of the ECON Committee, declared: “Parliament clears the way in order to give product issuers more time to implement PRIIPS. This is good news for issuers and investors who can hope for accurate PRIIPS documents. Greens succeeded to make the true risks of investment products visible through an additional visualized “stress scenario”. It is equally welcome that the insurance lobby failed to get unjustified special treatment for products covered by solvency II. The parliament’s negotiation team has also resisted successfully calls to include misleading past performance data in the PRIIPS documents.”
BETTER FINANCE has frequently voiced its support for a balanced PRIIPs regulation, seeing it as a powerful instrument in enabling retail investors to make sound investment choices by allowing easier comparison between different investment products.
BETTER FINANCE has also expressed its strong opposition to the elimination of past-performance in favor of future performance scenarios.
For one, future performance scenarios themselves are based on past performance, albeit only on 5 years rather than the current mandatory disclosure of at least 10 years.
These new rules will prevent investors from knowing whether investment products they consider investing in had good returns and whether they ever met their investment objectives. Even though past performance does not constitute a guarantee for the future, this information represents a valuable piece of factual information for investors to base their investment decisions on.
BETTER FINANCE also considers that this new regulation violates the MiFID II Directive (Directive on markets in financial instruments, 2014/65/EU) which forbids any future performance information based on past performance.
Unfortunately, the delegated act is likely to be confirmed by the plenary assembly of the European Parliament and by the Council of the EU, thereby dealing a blow to investor protection. The regulation will enter into force in January 2018.
Consult the ECON Committee resolution here
Consult the delegated act here