On 5 September, the European Parliament, by a broad majority, rejected the Commission Delegated Regulation, adopted by the European Commission in mid-July, which supplements the Packaged Retail and Insurance Based Investment Products (PRIIPs) Regulation. The PRIIPs Regulation is due to take effect on 31 December 2016.
The Parliament voted to ask the Commission to: (i) redraft the Delegated Regulation to take account of the concerns raised by the Parliament and those that have been previously raised by stakeholders; and (ii) push out the implementation date for the PRIIPS Regulation to allow the Commission time to redraft.
The Delegated Regulation sets out the standards which all investment providers would have to meet to provide consumers with adequate information on investment products. Part of this information provision is the Key Investment Document (KID) which is meant to be provided with all PRIIPs to give consumers information about the features, risks and costs of an investment product.
The Parliament’s view is the KID is not fit for purpose, repeating concerns raised by stakeholders and previously reported in the Arthur Cox Insurance Update e.g. the proposed methodologies for the calculation of future performance scenarios are flawed and the information provided in the KID does not meet the test of being “accurate, fair, clear and not misleading”. The Parliament also doubted whether the KID accurately reflects the risk of investing.
A majority of the Council of Ministers supported a one year delay of the implementation of the PRIIPs Regulation until 1 January 2018. Ireland was one of the 23 countries which backed the vote requesting a delay.
The Delegated Regulation will be returned to the Commission for revision.
A link to the Parliament’s resolution rejecting the Delegated Regulation is here.