Brussels, 22/10/2013 (Agence Europe) - On Monday 21 October, the European Parliament's economic and monetary affairs committee decided on its negotiating position on pre-contractual information to be provided to retail investors (PRIPS), but didn't give the rapporteur a mandate to immediately enter negotiations with the member states, thus preventing agreement being reached in first reading in codecision.
Pervenche Berès (S&D, France) is happy with the Parliament's work to ensure a harmonisation of the information provided to consumers, verification of the product to check it suits the investor and boosting the powers of EU and national supervisory bodies to ban toxic financial products. She explains in a press release that despite the work accomplished, some conservatives had blocked the opening of talks with the Council of Ministers on formal adoption of the legislation, and called on all political parties to take a responsible attitude so that the matter can be settled during the current European Parliament. A vote in plenary will now be needed, possibly in November, before the Parliament and the Council of Ministers will start negotiating.
Part of the PRIPS legislation unveiled in July 2012 to boost retail investor protection (see EUROPE 10647), this draft regulation requires service providers to produce a two-page, regularly updated document of key facts (type of investment, risks, commission paid to any financial intermediaries) for retail financial products so that consumers can make an enlightened choice and shop around.
Reduced scope. The legislation will now not cover deposits, such as current accounts, shares or insurance. Syed Kamall (Conservatives, United Kingdom) commented: “I'm pleased that the Socialists backed down at the last minute on the issue of the scope of the regulation, to reach a deal with the centre-right block. However I still could not support the eventual proposal because it still sought to regulate the issue of corporate bonds and pension packages.” He added: “The rest of the proposal has been embellished with additions that are at best pointless and at worst hugely burdensome. I'm not convinced many consumers will find this useful at all.”
If retail investors can show that the key document describing the product has misled him, then the service provider can be held liable and be subject to fines by the supervisory body of up to 10% of annual turnover or €5 million (for physical persons) or withdrawal of the product. (MB/transl.fl)