Negotiators from the European Parliament and the Council of the European Union met on Wednesday 17 December for a sixth session of interinstitutional negotiations (trilogue) on the retail investment legislative package aimed at reforming the PRIIPS regulation and the MiFID II, IDD Solvency II, UCITS and AIFMD directives (see EUROPE 13671/7). Negotiations continued on Wednesday evening after our deadline.
Commissions. This new round of negotiations offered a fresh opportunity for EU co-legislators to reach an agreement on how to regulate commissions paid to financial intermediaries (inducements), as the very principle of this form of remuneration was no longer subject to a possible ban at this advanced stage of the negotiations (see EUROPE 13446/10, 13371/31). However, the exchanges were intended to clarify the level of detail to be included directly in level 1 legislation and the possible use of level 2 delegated acts to specify the applicable criteria, such as the existence of a specific benefit for the customer.
In this context, the EU Council argued in favour of defining these rules as fully as possible in the relevant directives in order to limit the technical mandates, while the European Commission considered it necessary to retain technical acts to ensure uniform implementation across all EU Member States.
Value for money. The session was also intended to provide an opportunity to make progress on practical ways of assessing the value for money of financial products offered to retail investors. In particular, the discussions were to define the method of comparison to be used, through the use of benchmarks for insurance products and groups of comparable products for financial instruments. The negotiators also had to clarify the scope of the products included in these references and the degree of standardisation to be set under the technical rules, with the European Commission arguing for the integration of all costs, including those linked to distribution.
Investment path. Wednesday’s discussions also provided an opportunity to reconcile positions on the rules structuring the investment process for retail customers, from the advice phase through to the purchase of a product. The issues at stake included whether or not to maintain the “best interest” test, and the content of the suitability and appropriateness tests applied throughout the programme. The EU Council called for these requirements to be streamlined, while the European Commission considered them to be essential safeguards for investor protection.
PRIIPs. Finally, this trilogue session should provide an opportunity to finalise the last outstanding points on the revision of the regulation on key information documents for retail investors (PRIIPs). In recent weeks, negotiators have been working on technical adjustments to harmonise the way in which costs and performance scenarios are presented in the key information documents issued to retail investors in order to make it easier to compare different investment products (see EUROPE 13763/8). (Original version in French by Bernard Denuit)