Industry frustrated by continuing EU retail regulation saga
Asset managers could be left with little time to prepare for Priips
An influential MEP has warned that the asset management industry could be left with little time to prepare for new rules aimed at protecting retail investors because of a wrangle among European officials.
Sven Giegold, a member of the European Parliament’s committee on economic and monetary affairs (Econ), said he feared the finalisation of the draft rules, which form part of a wider piece of regulation known as Priips, could be delayed because of disagreements between different EU bodies.
He said: “We are losing time. This means the [fund] industry will have less time to adapt. This is not good law making.”
The disagreement stems from the rules underpinning the so-called key investor document (Kid), which is being introduced to make it easier for consumers to compare different investment products, from funds to insurance products.
Last month, the EU’s trio of watchdogs warned that their boards had failed to reach an agreement on proposed amendments to the rules, casting doubt on whether Brussels can meet its plan to sign off the Priips regulations in February.
Sean Tuffy, head of regulatory intelligence at Brown Brothers Harriman, the bank, said the fund industry is frustrated by the continuing Priips saga. He said: “The recent twist means asset managers remain in a holding pattern. Asset managers have had to adopt a stop-start approach to the implementation [of Priips], which can be costly.”
Priips had been due to come into place this month, but the European Commission, the EU’s executive arm, had to push back the introduction by a year because of a clash in Brussels last autumn.
The parliament, in a first for financial services regulation, rejected the first set of draft rules in September, forcing the commission to revise the regulations.
Several amendments were then submitted to Europe’s regulators, which includes the insurance, banking and markets watchdogs.
However, while the boards of the markets and banking regulators signed off the plans to amend the rules, Europe’s insurance watchdog did not. It is concerned over various changes, including the treatment of so-called multi-option products.
It is understood that the commission and the regulators will meet next week to discuss the stand-off.
London MEP Syed Kamall, a member of the Econ board, said: “The [regulators] need to work together to achieve this outcome and the European Parliament will keep up the pressure on them.”
A spokesperson for the European Insurance and Occupational Pensions Authority, speaking on behalf of all the regulators, said that while some differences remain between the regulators’ boards, they are “ready to provide support to the European Commission, European Parliament and council in finding solutions on the detail”.
She added: “Despite the complex cross-sectoral nature of this dossier, stakeholders agree that it is important to find practical ways forward as soon as possible to ensure enough time for the implementation by the beginning of 2018.”
The commission said that it plans to sign off the rules, which includes changes to how asset managers and insurers calculate and display fund charges and investment performance, “as soon as possible”. They will then be sent to the parliament and European Council for final agreement.