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The German Investment Funds Association (BVI) said that the new rules, which are due to apply to mutual funds sold to retail investors in Germany by 2020, should be delayed until January 2022.
The new regulations are intended to help retail investors better understand and compare the key features, risks, rewards and costs of investment products sold by asset managers, banks and insurers.
Under the new rules, all providers of so-called Priips — packaged retail investment and insurance-based products — are required to outline a range of returns that an investment might deliver in different market conditions, instead of publishing historic performance data.
Critics, however, argue that this has led to misleadingly optimistic return projections based on the highly positive performance of financial markets in recent years being provided to retail investors.
Providers of structured products in Germany have already started to publish performance projections using the new Priips rules.
Thomas Richter, BVI chief executive, said “alarming deficiencies” has been revealed in the methodology for calculating future returns which had led to “obviously wrong and misleading figures being disclosed to investors”.
The BVI’s statement follows an announcement in January by the UK’s financial regulator that allowed investment managers to provide additional “explanatory materials ”.
The Financial Conduct Authority’s statement followed the publication of wildly misleading performance projections by some product providers that suggested savers could earn massive returns.
The BVI also said that it was concerned that “false and misleading” information was also being provided to investors about the charges that fund managers expect to incur for buying and selling securities.
Full article on Financial Times (subscription required)