In a letter to the MEP members of the ECON Committee dated 21 June, Peter De Proft, director general of the European Fund and Asset Management Association (EFAMA), also expressed what he said were his Brussels-based organisation’s “concerns” about the latest developments of the PRIPs initiative” which, he noted, has been under discussion since 2007.
In particular, he urged the EU lawmakers to abandon their efforts to add product categories and certain additional regulations to the proposed directive, and to "return to the primary objective of the [PRIPs] initiative".
“We firmly believe that the introduction of a Key Information Document as a uniform information tool for all PRIPs is likely to effectively improve investor protection by standardising and simplifying presentation formats, and thus enhancing product comparability for investors,” De Proft said in his three-page letter.
“It should also contribute to the creation of a level playing field in the area of retail distribution.
“Unfortunately, the recent discussions on the EU Parliament’s position with regard to PRIPs are increasingly diverging from the initial regulatory approach proposed by the commission, and even threatens to undermine the feasibility of the whole initiative.”
De Proft went on to cite what he said were several areas of concern in particular to EFAMA, including an apparent move by the EU lawmakers to include more categories of products under the PRIPs directive’s scope; a perceived drift in the direction of intervening in “the product manufacturing process”, as opposed to merely establishing a “standardisation of product transparency rules"; and ongoing discussions surrounding the possible introduction of a “warning label for certain products”.
‘Hamper distribution’
As for the Key Information Documents, De Proft said EFAMA was “very concerned that the distribution of financial products will be hampered by measures which generate solely red tape or pose an artificial hurdle" but add nothing in the way of extra protection for invesetors.
“Given that the progress of the PRIPs initiative after its initiation in 2007 has so far been very slow, any further postponement in terms of adoption must be expected to weaken the relevance of the whole project,” De Proft said.
Through its 27 member associations and 60 corporate members, EFAMA claims to represent around €14trn in assets under management, of which €8.9trn was held in some 54,000 EFAMA-member-managed investment funds at the end of last year. Just over 35,000 of these funds were Undertakings for Collective Investments in Transferable Securities (Ucits) funds, according to EFAMA.
As reported, Christian Dargnat, chief investment officer of BNP Paribas, was elected president of EFAMA last week, after having served as vice president since 2011.
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In a related development today, Julie Patterson, director of authorised funds and tax for the Investment Management Association (IMA), said in a statement that her EFAMA-member organisation shared the concerns "of the wider European fund management industry" about the "on-going delays to the adoption of the PRIP KID".
"Moreover, suggestions that the KID regulation should include restrictive rules on eligible assets, such as transferrable securities, underlines the need for there to be a joined-up debate on appropriate protections for retail investors without limiting their investment needs," Patterson said.
Patterson’s comments were included in a reaction statement by the IMA to the European Commission’s release of proposed regulations on the management and marketing of European long-term investment funds (ELTIFs). The IMA represents the UK’s assetment management industry.
