EBF advisor: Pauline Guerin
Publication date: 17 January 2020
On behalf of the European banking sector, the EBF has submitted its comments to the European Supervisory Authorities (ESAs) on the consultation paper setting out proposed amendments to the Commission Delegated Regulation (EU) 2017/653 (PRIIPs Delegated Regulation).
The EBF welcomes the ESAs’ consultation. However, Contradictory, overlapping and complex disclosure requirements may discourage retail clients from investing in financial instruments. Therefore, the EBF considers that it is important to work in the context of CMU 2.0 in order to improve retail investors’ trust into financial markets for the benefit of companies looking for funding and for the investors’ long-term benefit. In fact, as advocated for in the Markets4Europe campaign (a private sector initiative identifying both the obstacles to a deeper CMU and the required reforms leading to better integrated markets) the EBF believes that requirements relating to clients’ information should be reviewed as to be made more consistent and less overwhelming for clients. We believe that a higher quality of information should be favoured.
The EBF would like to raise number of concerns:
– The EBF welcomes the ESAs consultation on PRIIPS but wonders how this articulates with any level 1 change. The Level 1 revision should take place before any level 2 change in order not to double the implementation work and costs.
– The EBF supports further alignment between PRIIPS and MIFID
– The EBF supports that the amendments proposed in this Consultation Paper should be implemented at one point in time. However, it is important to ensure that investment firms are given sufficient time to adapt to the new rules, as they will require substantive changes to IT systems.
– The EBF welcomes the ESA statement from 24 October 2019 regarding the PRIIPs scope for bonds but it would welcome further clarification as to the intended scope on Level 1.
– The EBF believes that a more comprehensive consumer testing of the proposals should have been conducted, in particular regarding the cost & charges information.
– Though the aim of comparability of the PRIIP KID documents is desirable – the comparability should only be a priority for de-facto comparable products. For instance, investors do not compare OTC derivatives with investment funds and comparability at the cost of precision and adequate information should therefore not be the result.
– The EBF would like to make a general comment on the articulation between PRIIPS and UCITS requirements: in the case a UCITS KID is required, the EBF does not the support the idea of duplicating the requirements with a PRIIPS KID.
– The EBF would also like to underline the fact that all new requirements such as PRIIPS demand a high level of data information. The need for data increases in parallel with regulatory requirements which then lead to an increase of data costs.
For more information:
Pauline Guerin, firstname.lastname@example.org