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Following press reports that the European Commission has put pressure on the European Supervisory Authorities (ESAs) to propose, by the end of January, technical solutions to make the key information document (KID) for packaged retail and insurance-based investment products (PRIIPs) suitable for undertakings for collective investment in transferable securities (UCITS), in view of the end of the exemption for these funds from PRIIPs rules in December 2021, William Vidonja, head of conduct and business at Insurance Europe, said:
“It is frustrating that PRIIPs are treated as if they are only applicable to asset managers, when 75% of PRIIPs are in fact insurance-based investment products. For example, all the technical proposals that have been put forward so far to amend the PRIIPs KID have been designed with customers buying investment funds in mind, instead of insurance consumers. This approach is wrong. Consumers buying insurance-based investment products should not be treated as second class.
“The European Insurance and Occupational Pensions Authority’s board of supervisors was therefore right to reject the previous proposals. The proposed changes to the PRIIPs KID were not sufficiently tested and would have made the KID worse than it is now. This would have meant even more confusion for insurance consumers and further undermined their understanding of the insurance-based investment products they were purchasing.
“Since its application in 2018, the PRIIPs regulatory framework has already gone through a series of eight adjustments, including guidelines, Q&As and supervisory statements. These changes have not fixed the problems.
“We therefore do not need another ‘quick fix solution’ that doesn’t work and that would only result in insurance consumers becoming even more confused. Furthermore, we do not see how, in such a short timeframe, the ESAs and the European Commission can develop meaningful and thoroughly tested technical solutions that would be workable for our products and that would benefit insurance consumers. Instead, the recently launched Commission study on distribution and disclosures would provide a solid basis on which to rethink the approach on PRIIPs.
“We look forward to the Commission and the ESAs working on solutions that actually benefit insurance consumers and prioritise them, rather than self-imposed deadlines related to other products.”