Brussels, 02/07/2012 (Agence Europe) - On Tuesday 3 July, the European Commission will present a triple legislative proposal which is much anticipated by the BEUC (European Consumers Organisation), as it aims to meet the major concerns of consumers investing their savings in funds, insurance products or other packaged investment products. On the eve of the presentation, the BEUC issued a warning against the risk that consumers may not be sufficiently protected against conflicts of interest in the insurance intermediaries sector.
The announced legislative package is expected to include: - the introduction of a so-called “Key Investor Document” (KID) for packaged investment products such as investment life-insurance (proposal on packaged retail investment products (PRIPS); - the strengthening of the liability of depositories of investment funds (revision of the directive concerning undertakings for collective investment in transferable securities); - and the disclosure of commissions paid to insurance mediators.
BEUC indicates that it supports the introduction of the “Key Investor Document” as an overdue means of giving clear information to consumers about the potential risk profile of a product. It also sees it as a considerable step forward that sales rules on similar investment products, which until now differed if sold by banks or insurance brokers, will now be harmonised. However, the BEUC takes the view that it is regrettable that plans to oblige insurance brokers to reveal their commissions will be insufficient to tackle the problem of conflicts of interest in the sector, as the risk remains that intermediaries will continue to recommend the product with the highest commission. “For too long, small investors have been lured into buying risky and unnecessarily complex products which all too often benefit no one but the bank salesperson. This Key Investor Document should help consumers to better understand the risk profile of the product and the charges they have to pay for it. We hope legislators will stand firm in defence of these commendable proposals against efforts to water them down. Conceding a 'business as usual' attitude within the financial sector is a risk we cannot afford”, said Monique Goyens, Director General of the European Consumer Organisation. She added: “More transparency of commissions in the insurance sector will not eradicate conflicts of interest. The sector is malfunctioning due to misconceived incentives given to bankers and intermediaries. More openness will only reveal the problem, not change the system”. (AN/transl.fl)