French financial sector challenges PRIIPs standards
Nine French financial services organisations, including the major French asset management association, AFG, have expressed concern about the European Commission’s adoption, in June, of regulatory technical standards for the new PRIPPs (Packaged Retail and Insurance-Based Investment Products).
The controversial new PRIIPS regulations are set to be implemented on 1 January next year, and aim to to improve the product information given to investors through a so-called key information document (KID).
The regulatory technical standards, or RTS, at issue were submitted to the European Parliament and Council for approval by 30 September. But in a joint statement today, the nine French financial services organisations sector announced that they have asked both institutions to object, in order to enable the RTS criteria to be properly reviewed, as part of a larger bid to postpone the implementation of the new PRIIPS altogether.
‘Non-transparent and deceptive’
They argued that if the regulations are implemented as currently proposed, the new PRIIPs rules would provide investors with “non-transparent and deceptive” information that would not protect them.
They also explained that players from the financial sector are now under pressure, as the deadline is too tight to implement a regulation with a final version that would eventually be released during the fourth quarter of 2016.
The French financial services organisations’ objections are the latest in a growing number of such protests by representatives of companies that will be affected by the PRIPPs rules. As reported, the European Fund and Asset Management Association (EFAMA) raised objections in May, while the chief executive of the Federation of European Independent Financial Advisers (FEIFA) expressed his organisation’s unhappiness in July.
PRIIPS regulation mentions that asset managers already producing key information documents would benefit from a transition period that should run until 31 December 2019 to be compliant.
However, the associations argue that RTS have suspended that transition period and set up a deadline on 31 December 2016 to be in line with the original text.
The nine associations said that given the complexity, the cost and the multiple documents that should be provided to investors, insurers may seriously consider the reduction of options and assets proposed in the contracts of insurance-based investment products.
They underlined that it would result into the end of open architecture as well as in a drop in the product offering to investors. Also, the implementation of the regulation, as per se, would harm the diversity of players in the French financial industry.
This article was first published by International Investment’s sister publication, Investment Europe.