Technical standards that have been widely-criticised across Europe relating to Packaged Retail and Insurance Based Investment Products (PRIIPs) have been rejected today following a vote by the European Parliament’s economics committee.
The committee has this afternoon voted down the measures relating to PRIIPs such as investment funds, insurance products and derivatives. The European Commission had proposed Regulatory Technical Standards (RTS) for PRIIPs under their so-called ‘delegated acts’ powers, giving the European Parliament the opportunity to overturn them.
Although rarely used in financial matters, a cross-party grouping of MEPs has today invoked the powers to reject the rushed proposals, and ask the commission to listen to legitimate concerns from companies that provide these financial products.
The vote by the economics committee must be upheld by an absolute majority of the full European Parliament.
European Conservatives and Reformists chairman and London MEP Syed Kamall, said: “The committee would have preferred not to take this drastic step, but we have been hitting our head against a brick wall with the commission. These standards – as they stand – could hurt high street investors, like the millions of people who go into their bank to set up an ISA account.”
As reported here yesterday, a vote to over turn a previously approved Regulatory Technical Standards (RTS) has never been taken before. As a result, this landmark overturn decision by the European Parliament in Brussels will now 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 yesterday.
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, going as far as to warn of a future industry miss-selling scandal unless changes are made.
Kamall added: “This is not a political decision. A cross-party group of MEPs has come together to say that technical standards need to be accurate. The commission has dismissed all opposition as industry lobbying but the industry also contains fund providers who support the principle of this legislation but have legitimate concerns. We have a responsibility to listen and question all parties involved.
‘Clear and accurate guidance’
Kamall said that the commission now “needs to realise that we are serious about demanding they get this right”. He pointed that the MEPs are not rejecting the principles behind this regulation, but that “clear and accurate guidance to investors is crucial”.
“We want legislation that will deliver, not tokenistic legislation that is more concerned with meeting a deadline than protecting consumers,” he said.
Paul Stanfield, chief executive of the Federation of European Independent Financial Advisers (FEIFA) who has led the campaign for the delay of PRIIPs introduction said yesterday 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…the first time such a rejection has been issued,” he said.