PRIIPS ‘not fit for purpose,’ says industry associations
Latest news
PRIIPS ‘not fit for purpose,’ says industry associations 26 January 2018London Reporter: Jenna Lomax
Image: Shutterstock
The Personal Investment Management and Financial Advice Association (PIMFA) has joined forces with the Investment Association to call for a review of the Packaged Retail and Insurance-based Investment Products (PRIIPs) regulation.
This collaboration comes following industry concerns of potential flaws in the design of key information documents (KIDs), which PIFMA states could result in investors receiving misleading information ahead of transactions.
According to PIFMA, those concerns have now been realised, as calculation methods mandated by the PRIIPs regulation has resulted in product risk and performance data that is “not fit for purpose”.
PIFMA states that this incorrect data does nothing to help investors who will rely on KIDs to make informed investment decisions or rely on it when comparing different products.
In addition, PIMFA has asked the UK’s Financial Conduct Authority to provide further clarification of its recent suggestion that firms selling or advising on PRIIPs should address potentially misleading information in KIDs by providing additional explanation as part of their communications with clients.
Liz Field, CEO of PIMFA, said: "The fundamental purpose of the PRIIPs regime is undermined if KIDs fail to provide accurate, timely and clear information to investors. In instances where KIDs provide misleading information [...] advisers and distributors should not be expected to ‘paper over the cracks’ by providing ‘additional explanation’ to investors.”
She added: “The ad hoc correction of documents that are a matter of regulatory requirement should not be undertaken lightly — as well as creating further inconsistencies in the way individual products are presented to investors, such an approach may result in wholly unreasonable liabilities for advisers and distributors."
NO FEE, NO RISK 100% ON RETURNSIf you invest in only one asset servicing news source this
year, make sure it is your free subscription to Asset Servicing Times
Image: Shutterstock 