Brussels, 20/11/2013 (Agence Europe) - On Wednesday 20 November, the European Parliament (EP) worked out its negotiating position on the draft regulation on pre-sale agreement to be provided to retail investors in financial products, giving rapporteur Pervenche Berès (S&D, France) the mandate to open negotiations with the Lithuanian Presidency of the Council of the EU with a view to reaching agreement by the end of the current European Parliament in May 2014.
All too often, intermediaries confuse advertising with information and the EP has fought hard to introduce harmonisation of the key information to be provided to consumers, verification of the nature of the product vis-à-vis the consumer's requirements and giving national and European supervisory bodies greater power to ban or suspend the sale of toxic financial products, commented Berès in a press release (see EUROPE 10948).
The EP feels that the new rules should cover a wider range of financial products than initially suggested by the Commission, including all financial packages. Thus all structured investment products (unit trusts and the like), private pensions and profit-sharing insurance products will be covered, explained EU Internal Market Commissioner Michel Barnier at the EP plenary. The MEPs have extended the initial scope of application to savings products based on interest rates, including company bonds, long-term savings accounts and life insurance.
Berès did not win her way, however, over having sovereign bonds included. An EPP amendment to exempt life-insurance products was rejected in a plenary vote. Deposits and insurance products for which a sales value is not provided are also excluded.
The draft regulation is part of the PRIPS legislation unveiled in July 2012 to boost protection for retail investors (see EUROPE 10647), and will require service providers to produce a regularly updated two-page document of key information (type of product, aims, risks and any commission paid to financial intermediaries) for retail financial products in order to help consumers make an informed choice and be able to shop around.
Barnier said the new measures would help combat the vast asymmetry of information that puts retail investors in a weak position with regard to the seller. He said there were countless cases of investors everywhere in Europe who have bought products sold as safe and reliable, but then found themselves facing losses greater than they could have imagined, which had encouraged people to save money instead. The Commissioner said that the proportion of consumers' financial assets held in bank accounts is as high as 40% or even 50%, which is not beneficial to the economy as a whole.
On behalf of the Greens, Philippe Lamberts of Belgium hailed the EP's desire to create a sustainable investment label, laying down criteria for the sustainability of a financial product. He said this should make it tougher to “greenwash” products on the investment market. (MB/transl.fl)