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EFAMA's position
EFAMA fully supports the policy objectives the Commission seeks to achieve with the PRIPs initiative. EFAMA is committed to make a constructive contribution to the legislative debate with a view to ensuring that these objectives will effectively be reached in practice and so achieve improved protection for retail investors across the Union.
EFAMA supports the Key Information Document (KID) proposal, which seeks to address crucial issues of retail investor protection and the lack of level playing field in the distribution of retail financial products around the Union. It is essential to create a harmonized framework for product disclosure that seeks to eliminate regulatory arbitrage in the distribution of financial products to retail investors and to ensure a high level of protection for retail investors via the provision of easily-accessible product information produced to common standards.
EFAMA believes that the UCITS KIID, which was subject to consumer testing and research, and which has just been introduced in the Union, should be the benchmark for the KID. EFAMA recognises, however, that PRIPs cover a very wide range of products designed for different purposes (from structured deposits, through national non-UCITS retail funds, structured products and insurance products, through to long-term retirement products). Therefore, EFAMA acknowledges that, within tight parameters, there needs to be some flexibility in the content of the KID.
Against this position, EFAMA believes that some aspects of the proposal need to be clarified or amended in order to achieve the desired outcome: a level playing field across investment products.
Scope of the KID
EFAMA recommends that the KID Regulation should require Member States to draw up disclosure requirements for those pension arrangements that are not IORPs and that are exempted from the KID, but should leave it to Member State discretion as to the detail of those dislcosures.
Nationally-regulated, open-ended, non-UCITS retail funds
EFAMA urges that non-UCITS retail funds be allowed to opt to provide a KID that is in line with the UCITS KIID instead of the PRIP KID, and that this provison be reviewed as part of the wider review of the PRIP KID and UCITS KIID provided for by Article 25 of the KID Regulation. Furthermore, EFAMA urges that Member States should have national discretion to require non-UCITS retail funds in their territory to use a KID that conforms with the UCITS Directive rather than the PRIP KID. This is already the position in many Member States.
Consequential amendments required for the UCITS KIID
EFAMA strongly believes that the Distance Marketing Directive exemption for PRIPs sold via distant communication, and which was available for UCITS under the Simplified Prospectus, should be reinstated for the UCITS KIID. Its removal for UCITS has caused various practical difficulties for investors, distributors and manufacturers. Also, the PRIP KID is required only for retail investors, but the UCITS KIID has to be provided also for professional investors, even though this document might not always be suited to their needs as they seek much more detailed and technical information. The UCITS KIID should be aligned to the PRIP KID on both these points as part of the “UCITS VI” review.
Level 2 measures