Key information material for retail investors should not be overburdened, says EUSIPA, responding to European Commission proposal
Brussels, July 16, 2012
The European Structured Investment Products Association (EUSIPA) has taken note of the recent proposal published on the 3rd of July 2012 by the European Commission (Proposal for a regulation of the European Parliament and of the Council on key information documents for investment products) relating to the regulation of Packaged Retail Investment Products (PRIPs), and would like to make the following preliminary comments:
• EUSIPA in general welcomes the idea of standardising the legal requirements for the distribution of financial products to retail customers, as is intended with this proposal.
• EUSIPA is convinced that a framework for the proposed key information document (KID) deemed to summarise the features of a product, including its risk profile, is beneficial in terms of market transparency, and also helps to ensure comparability across different financial products.
• EUSIPA wishes to point out that many of its national member associations, notably the Deutsche Derivate Verband in Germany, have for several years been engaged in a process of establishing key information material for retail investors. EUSIPA therefore encourages the relevant EU law-making institutions to take account of existing best-practice examples going forward.
• EUSIPA is concerned that some requirements relating to the content of the KID could make the document overly detailed, which would run counter to the original intended purpose of the material. There is also the possibility of there not being a clear distinction between the KID and other product-related information material. Again we would like to stress the importance of harmonising the KID requirements with other disclosure documents already required under different national regimes for retail product distribution in the EU, such as the Italian Scheda Prodotto.
• EUSIPA is also very concerned that the proposed reversion of the burden of proof in relation to damage claims following the use of the KID document could create a significant incentive for unwarranted litigation by investors, while also putting an unfair burden on product manufacturers. “As much as we support harmonising the distribution of financial retail products in the EU, we are concerned that the proposed regulation overshoots original intentions. It runs the danger of amassing a large amount of information on what should be a short and clear document. Neither do we support the creation of a potential new market for litigation, which will benefit lawyers but will not benefit customers,” said Thomas Wulf, Brussels-based secretary general of EUSIPA.
For more information please contact:
John Ferry
Greyfriar Communications
Tel: +44 (0) 131 654 0922