In a meeting with the Council Working Group on Thursday, the EC agreed to impose a 12-month delay to the directive after 23 EU-member countries backed the move last month, British medio outlets have reported.
The UK, France, Germany and Ireland were 23 out of the 28 member states lobbied to push back the implementation date, originally scheduled for 1 January 2017, by one year to 31 December 2017.
The EC will publicly announce the decision on 9 November, despite previously saying it will debate the issue on 22 November.
Alan Morgan-Moodie, chief exectuive of the Association of the International Life Offices’ (Ailo), told International Adviser on Friday that he had recieved an email from officials in Brussels on Thursday, saying they expected the regulation to be deferred by 6-12 months but stopped short of issuing a definitive date.
Landmark ruling
The delay follows the landmark rejection of the Priips regulatory technical standards (RTS) by the European parliament (EP) in September.
Around 602 MEPs voted in favour of changing the current regulatory technical standards (RTS) for introducing the key information document (Kid) – a three-page brochure designed to make it easier for retail investors to compare packaged retail and insurance-based investment products (Priips).
John Beaney, Ailo’s regulatory expert, said at the time, that he expected the roll out of the Priips regulation to be postponed, while the European Commission (EC) renegotiate the terms of the RTS.
Signposting offshore bonds
It is hoped the postponement will provide time to clarify questions remaining around the regulation, which critics argue could “mislead” retail investors in areas like performance.
Ailo’s Morgan-Moodie said the main issue for international life offices is that the RTS requires insurers to produce a Kid not only detailing features of the offshore bonds – which he claims are the single most popular cross-border savings product in Europe – but also the same level of investment information that a fund manufacturer has to provide.
“There’s tens of thousands of funds out there. What we [Ailo] want is to go back to the level regulation where we [the industry] can signpost,” he said.
Moodie argues that the Priips regulation in its current form, without the RTS, does not need changing and can be implemented as it would allow offshore insurers to “simply signpost” by providing website links to where a policy holder can go to find more information about the funds they want to invest in.
‘Unworkable’ Priips
Paul Stanfield, head of The Federation of European Independent Financial Advisers (Feifa), welcomed the delay, adding that “common sense has finally won out”.
“Pripps is a very important piece of the EU regulatory jigsaw and forms a significant element of necessary consumer protection.
“That is why it has to be right – it should not mislead investors or lead to a reduction in their financial options and choices, that would obviously be to the detriment of consumers and therefore counter-productive. If it had gone ahead on the originally planned schedule there was a very real chance that this is exactly what would have resulted,” he said.
In June, he slammed the Kid as “unworkable”, warning that implementing it in its current form would reduce choice for consumers.
He warned that the limited timeframe fund manufacturers had to comply with the previous deadline meant many would end up cutting their product ranges.
‘Danger’ to investors
Meanwhile, in May, Europe’s main asset management trade body blasted the new consumer information requirements as a “danger” to investors as it will fail to disclose the past performance of funds to investors, which it called “contradictory” as any future scenarios are based on them.
It argued that past performance of Priips should be included to let investors know whether a product has made money in the past so that they can compare them with other products.
International Adviser contacted the EC for a comment at the time of publication.
