PRIIPs regulation in urgent need of review, PIMFA warns

PIMFA, the leading wealth management and financial advice association, has announced that it welcomes the Financial Conduct Authority’s (FCA) decision to further investigate industry concerns about the operation of the PRIIPs regime since its implementation in January 2018.

The association has agreed 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.

However, while the primary objective of the PRIIPs regime, which is 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 received support, there have been some concerns. For example, there is concern as to whether product providers’ compliance with the thoroughly detailed KID content requirements set out in the PRIIPs RTS is capable of producing disclosures that are clear, comprehensible and useful to investors.

The regulation itself requires a post-implementation review to be undertaken by 31 December 2018, though PIMFA is concerned by reports that the European Commission may defer this exercise.

As a result of this, PIMFA is urging the FCA, in conjunction with other national authorities who made their own concerns public, to put pressure on the commission to stick to their original timeframe.

Commenting, PIMFA director of UK regulation Ian Cornwall said: “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.”

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