PIMFA, a wealth management and financial advice association, has welcomes the FCA’s decision to further investigate industry concerns about the operation of the PRIIPs regime since its implementation in January 2018.
PIMFA agrees with Andrew Bailey’s acknowledgement that PRIIPs implementation “has not gone as we hoped it would” and has made clear its view that the PRIIPs regime is in urgent need of review.
While the central objective of the PRIIPs regime – to enable consumers to compare the price, risk and performance features of different types of products and make informed investment decisions as a result – has always had industry support, there has long been concern about whether product providers’ compliance with the immensely detailed KID content requirements set out in the PRIIPS RTS is capable of producing disclosures that are clear, comprehensible and useful to investors.
Although the Regulation itself requires a post-implementation review to be undertaken by 31 December 2018, PIMFA is concerned by reports that the European Commission may defer this exercise. PIMFA therefore calls for FCA, in conjunction with other national authorities and the ESAs, who have made public their own concerns about the scope of the Regulation, to put pressure on the Commission to stick to the original timeframe.
Similarly, there seems to be some doubt as to whether UCITS and other non-UCITS retail funds currently benefitting from the exemption in Article 32 of the PRIIPs Regulation will be brought within the PRIIPs regime after 31 December 2019. Given that much of the confusion about the way in which product costs are calculated/presented derives from the fact that the different requirements of the PRIIPs and UCITS regimes continue to operate in tandem, PIMFA believe that the PRIIPs regime (albeit in need of urgent/considerable improvement) should be extended to UCITS within the timeframe originally specified.
Ian Cornwall, PIMFA, Director of UK Regulation, says: “PIMFA’s feedback to FCA and the ESAs has made it clear that the almost exclusive focus of regulators on the challenges facing product providers in producing KIDs meant that distributors’ questions and concerns were being accorded minimal attention even though these were the very firms that would be responsible for ensuring the delivery of KIDs to retail investors across a very large proportion of PRIIP transactions.”
“Very few of the distributor issues that we identified in submissions to consultation papers and in discussions with policy staff were addressed by subsequent regulatory documents and PIMFA regard the FCA’s Call for Input as an opportunity to highlight some of these issues again”.