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Insurance Europe has published its response to a consultation by the European Insurance and Occupational Pensions Authority (EIOPA) on the integration of sustainability preferences in the suitability assessment.
The approach taken by EIOPA is, however, considerably less flexible than that taken by the European Securities and Markets Authority (ESMA). The current Level 1 and 2 rules on the suitability assessment work well in practice: while providing robust rules on the content of the assessment, they are also sufficiently abstract to adapt to different customers, products, and situations. By contrast, overly detailed provisions can create more practical and legal difficulties than they resolve. This risk is especially high for new rules that have not yet been tested. It is essential that guidelines leave distributors enough room for manoeuvre to allow for pragmatic and efficient implementation across different EU markets. The aim must always be to help the customer, not to steer them towards specific products or objectives.
EIOPA should, therefore, reevaluate the
proposed guidelines with a view to removing overly granular and
prescriptive requirements to keep the assessment of the sustainability
preferences as simple and accessible as possible. The aim should be to
give guidance, but without detailed requirements that benefit neither
insurers nor customers. Wherever possible, EIOPA should replicate the
flexibility of some ESMA guidelines by using ‘could’ instead of ‘should’
if appropriate. Given the similarities in the Level 2 Regulation,
divergence introduced solely at Level 3 is not justified.