The EU Parliament’s Committee on Economic and Monetary Affairs (ECON) has drafted a motion for a resolution calling for the rejection of the PRIIPs Regulatory Technical Standards (RTS), to be voted on tomorrow, citing what it states as inadequacies in the translation of technical requirements, as a reason to delay its launch.
Should this motion be voted for, it would likely mean a delay to the introduction of PRIIPs, which is presently due to come into force at the start of 2017, International Investment was told earlier today.
The RTS was issued on the 30 June this year and since then has been met with widespread condemnation from the industry, including some commentators, as reported here, going as far as to warn of a future industry miss-selling scandal unless changes are made.
Among the issues identified by ECON included concerns that some providers of PRIIPs products will be at a disadvantage to others because the methodology used can provide “misleading results”; for instance in the calculation of transaction costs, the risk categorization of insurance products, the inclusion of biometric risk premiums for insurance in the overall cost.
There are also concerns over the treatment of multi-option products such as, for example, offshore bonds, in relation to exemptions granted to UCITS funds. The committee pointed to flaws in the calculation of future performance scenarios that will not lead to “accurate, fair, clear and not misleading” results as requested by the regulations
‘Against the spirit’
The motion also expressed concerns regarding risks that the rules set out in the delegated regulation “go against the spirit” and aim of PRIIPs legislation for retail investors.
The committee’s motion is calling for the delegated regulation for PRIIPs to not enter into force and for a revision of the RTS to take into account its concerns.
Paul Stanfield, chief executive of the Federation of European Independent Financial Advisers (FEIFA) (pictured above), who has led the campaign for the delay of PRIIPS introduction, whilst remaining hopeful of a delay vote at tomorrow’s meeting, said that any decision to overturn the RTS would be a landmark vote.
“It is worth noting that the European Parliament has never before rejected a RTS financial services regulation. Therefore, this could be the first time such a rejection has been issued,” he said.
The vote takes place at the European Parliament building in Brussels tomorrow.