Members of the European Parliament adopted a resolution calling for changes to the legislation covering PRIIPs. It is now expected that the European Commission will submit a new version of the RTS, because the resolution means that the draft RTS will not enter into force in their current form.
Marc-André Bechet, Director Legal & Tax of Association of the Luxembourg Fund Industry (ALFI) says: “We welcome the support expressed by parliamentarians for clearer rules at level 2. In May the European Fund and Asset Management Association (EFAMA) highlighted the need to disclose past performance to investors and also outlined major issues linked to the current calculation and presentation of (transaction) costs. ALFI hopes that these concerns are taken up in a new delegated act from the Commission.”
The vote in plenary was preceded by a debate and vote in the European Parliament’s committee on economic and monetary affairs at the beginning of September, during which MEPs expressed major concerns with the level 2 draft regulatory technical standards (RTS) presented by the European Commission end of June 2016. Both the European Parliament and the Council of the EU have a right to object to the rules.
MEPs noted in the resolution that, among other things, if left unchanged, there is a risk that the rules set out in the delegated regulation go against the spirit and aim of the legislation, which is to provide clear, comparable, understandable and non-misleading information on Packaged Retail and Insurance-based Investment Products (PRIIPs) to retail investors. They underlined that the treatment of multi-option products still needs to be clarified, in particular in relation to the explicit exemption granted to UCITS funds under the PRIIPs level 1 Regulation. Moreover, MEPs were of the view that the delegated act as adopted by the Commission contains flaws in the methodology for the calculation of future performance scenarios, and the lack of detailed guidance on the ‘comprehension alert’ creates a serious risk of inconsistent implementation of this element in the key information document across the single market.
Marc-André Bechet concludes: “ALFI supports the European Parliament’s calls on the European Commission to present a proposal to postpone the application date of the PRIIPs Regulation, to ensure that the fund industry can implement the regulations for the benefit of retail investors.”
Press release
© ALFI - Association of the Luxembourg Fund Industry
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