Brussels, 26/07/2016 (Agence Europe) - After the summer break, four political groups (EPP, ALDE, ECR and Greens/EFA) at the European Parliament may table a motion to object to the technical standards detailing the content and methodology of the KID key information document which will, from 2017, be provided to consumers wishing to invest in certain retail financial products.
The four political groups, which form a majority at the European Parliament, are taking as their basis a letter dated 30 June from the chair of the committee on economic and monetary affairs, Roberto Gualtieri (S&D, Italy), to the outgoing Commissioner for Financial Services, Jonathan Hill. This letter, of which EUROPE has had sight, expresses “concerns” which had been brought by the industry to the attention of members of the European Parliament, particularly regarding the methodologies used to calculate the transaction costs and future performance of a financial product on the basis of its past performance.
As it did not receive the letter until after the technical standards had been adopted (EUROPE 11584), the Commission was unable to take account of these. On Monday 11 July, it drafted a letter responding point by point to the concerns raised by the Parliament, undertaking to publish any clarifications necessary in the coming weeks, in cooperation with the European financial supervisory authorities. “It is our view that the technical standards strike the right balance between all of the interests at stake”, the European institution notes in its letter, of which EUROPE has also had sight.
However, the four political groups seem determined not to let things lie and to invoke their right of objection. The fact that these groups are working together, contrary to the opinion of Pervenche Berès (S&D, France), shows that there is a certain “malaise”, said a source close to the dossier. There is not unanimity between the four groups on all points raised, but there are sufficient elements of agreement to issue an objection, the source added, with particular reference to the rapporteur's wait-and-see attitude over the dossier. The source went on to say that if the EP objects at the September plenary, the implementing standards will not enter into force and there is even the risk that Regulation 1286/2014, which lists the pre-contractual information (PRIIPs) that consumers must be provided with before investing in a retail product, will not be able to apply from January 2017.
The PRIIPs regulation rolls out across the EU a document containing the key information (type, objectives, risks, commission received by financial intermediaries) to allow a retail investor to make an enlightened choice and to compare offers of similar products. Most deposit products, non-life insurance products and life assurance products where benefits are payable following death or in the event of an accident leading to a disability are not included. The same applies to pension schemes providing a retirement income and individual retirement products for which an employer's contribution is required. (Original version in French by Mathieu Bion)