The European Commission has communicated that harmonised disclosure obligations and conduct of business rules for distribution must apply to all ‘packaged retail investment products’. This must render packaged retail investment products better comparable.
Such packaged retail investment products include:
- participations in investment institutions – both UCITS and non-UCITS
- unit linked products such as a life insurance featuring an investment component
- structured securities
- structured term deposits such as an interest cap (an option limiting interest rate risk).
Offerors of packaged retail investment products (such as the fund manager of an investment institution) and distributors (intermediaries and advisors) must – in addition to the prospectus for the product – make available a uniform document containing ‘key investor information’. This document will be comparable to the 1 or 2 page Key Investor Information document of UCITS IV, which will replace the elaborate Simplified Prospectus of UCITS III. This document discloses:
- the key features of the product
- its final costs
- the product risks
- expected risk-reward (returns)
- the conditions attached to capital guarantees.
The information must be made available to investors in a timely fashion, in order to be of actual influence on the decision to purchase the packaged product. It is to be expected that for packaged retail investment products the uniform information document will replace the financial leaflet (financiële bijsluiter) which is currently required in the Netherlands.
For the distribution of participations in investment institutions in the Netherlands there will be no difference whether the participations are offered via an investment firm or by the fund manager.
In addition, all conflicts of interest in connection with the sale of or advice on a product must be avoided, managed and disclosed.
The European Commission aims to submit a more detailed draft of this regulation for consultation by the end of 2009.