Brussels, 19th May 2016 - For immediate release
More work is needed on the PRIIPS KIID to avoid consumer detriment
The European Fund and Asset Management Association (EFAMA) issued today a 
Comment Paper in response to the European Supervisory Authorities (ESA)s final draft regulatory technical standards on key information documents (KIDs) for packaged retail and insurance-based investment products (PRIIPs) (the Draft RTS), published in April. EFAMAs key comments identify the RTSs remaining issues and potential solutions that can make the PRIIP KID fit-for-purpose.
Comment Paper in response to the European Supervisory Authorities (ESA)s final draft regulatory technical standards on key information documents (KIDs) for packaged retail and insurance-based investment products (PRIIPs) (the Draft RTS), published in April. EFAMAs key comments identify the RTSs remaining issues and potential solutions that can make the PRIIP KID fit-for-purpose.The PRIIPs KID is a good concept. Asset managers know how important it is that investors and their advisers throughout Europe are given meaningful, comprehensible and comparable information to feel confident about investing and make sound investment decisions. EFAMA has been a strong supporter of the overall objectives of the PRIIPs regulation.
A PRIIPs KID is a great step forward in terms of investor protection and that is why EFAMA believes it is crucial to get it right, rather than rushing it through.
EFAMA believes that the recently published draft Regulatory Technical Standards fail to meet some of the desired aims. Their main concerns regarding the RTS are highlighted below:
Past performance will no longer be disclosed to investors, even though future performance scenarios are based on them.
Costs are shown only by their impact on returns averaged over the recommended holding period of a PRIIP, making comparisons between products impossible and not showing to investors the actual costs.
The calculation of transaction costs is based on improper assumptions and leads to false outcomes that will be misleading to investors.
Two different disclosure documents will be presented to a retail investor when investing into the same fund through different means.
The PRIIPS KID contains too much prescriptive narrative that inhibits detailed explanation of the actual product.
Costs are shown only by their impact on returns averaged over the recommended holding period of a PRIIP, making comparisons between products impossible and not showing to investors the actual costs.
The calculation of transaction costs is based on improper assumptions and leads to false outcomes that will be misleading to investors.
Two different disclosure documents will be presented to a retail investor when investing into the same fund through different means.
The PRIIPS KID contains too much prescriptive narrative that inhibits detailed explanation of the actual product.
Alexander Schindler, President of EFAMA, commented: Comparability will not be achieved and there is a danger of investors, at best, being led to focus on the wrong issues and, at worst, being misled.
Not surprisingly, investors, too, are concerned, and consumer representative organisations such as Better Finance, the European Federation of Investors and Financial Services Users, are voicing similar concerns to which EFAMA fully subscribes to.
Peter de Proft, Director General of EFAMA, added: Given the potential benefits for investors, it is important to get these standards right and properly designed from the start. Unfortunately, the PRIIPs RTS will lead to consumer detriment if kept in their current form.
Ends
For media enquiries, please contact:
Peter De Proft,
Director General
Director General
About the European Fund and Asset Management Association (EFAMA):
EFAMA is the representative association for the European investment management industry. EFAMA represents through its 26 member associations and 61 corporate members EUR 21 trillion in assets under management of which EUR 12.6 trillion managed by 56,000 investment funds at end 2015. Just over 30,000 of these funds were UCITS (Undertakings for Collective Investments in Transferable Securities) funds, with the remaining 25,900 funds composed of AIFs (Alternative Investment Funds). For more information about EFAMA, please visit www.efama.org.
EFAMA is the representative association for the European investment management industry. EFAMA represents through its 26 member associations and 61 corporate members EUR 21 trillion in assets under management of which EUR 12.6 trillion managed by 56,000 investment funds at end 2015. Just over 30,000 of these funds were UCITS (Undertakings for Collective Investments in Transferable Securities) funds, with the remaining 25,900 funds composed of AIFs (Alternative Investment Funds). For more information about EFAMA, please visit www.efama.org.
