Athens, 02/04/2014 (Agence Europe) - On Tuesday 1 April, member states and the European Parliament reached interinstitutional agreement on the draft regulation listing the pre-contractual information to be supplied to retail investors. The regulation includes a quality label for some types of financial investment product (see EUROPE 10968).
On Wednesday 2 April, Greek Finance Minister Yannis Stournaras said this type of rules, suited to investor needs, will help restore confidence in banks.
Financial service suppliers will be required to provide a three-page, regularly updated document with key information such as the type of product, aims, risks and commission received by a broker. For example, investors will be informed whether their investment will contribute to any projects with environmental or social aims. The idea is that the document will help consumers make an informed choice and shop around. If the consumer shows that he or she suffered a financial loss as a result of information set out in the pre-contractual document, then the service provider can be held liable.
The member states accepted a request from the EP that a “comprehension alert” warning shall be introduced that “you are about to purchase a product that is not simple and may be difficult to understand”. The Finance Watch organisation, which defends citizens' rights in the financial domain, welcomes the move, but urges caution over the question of which products should be covered by the comprehension alert.
On an EU-wide level, a mystery shopping exercise by the Commission indicated that up to 60% of sales of investments could be considered unsuitable or not in the best interest of the consumer.
Personal pension schemes exempt from new rules. The new rules would apply to all investment products intended for small investors. However, they would not apply to: non-life insurance products, life insurance contracts where the benefits under the contract are payable only on death or in respect of incapacity due to injury, sickness or infirmity, or deposits other than structured deposits and securities. “Incomprehensibly, due to last minute pressure from national governments individual pension schemes will not be included”, explains European consumer organisation BEUC in a press release.
The EP will endorse the legislation during its second plenary in April. (MB)