Priips: EU Institutions reach agreement to close gaps in consumer protection
EU Parliament negotiators, the Commission and the Council of Ministers has reached an agreement regarding draft EU rules for small investors. The EU Parliament will put the agreed rules to a plenary vote later this month.
The agreement adds an additional product category to the regulation, extending the acronym from Prips (Packaged Retail Investment Products) to Priips (Packaged Retail and Insurance-based Investment products).
It includes the addition of a mandatory three page Key Information Document (Kid), which should be kept separate from advertising materials and prepared by a clearly identifiable entity that created the product.
The new Priips rules will apply to all investment products intended for small investors, with the exception of non-life insurance products, deposits other than structured deposits and securities as well as officially recognised pension schemes.
The agreed rules also include requirements regarding the liability for losses. If a small investor can demonstrate that a loss was caused by the information in the respective Kid, or was inconsistent with binding contractual documents, the investment product manufacturer could be liable under national law.
Responding to the proposed changes, Thomas Richter, CEO of the German Investment Funds Association BVI (Deutscher Fondsverband), expressed his support: “This result is good news for the consumer. Consistent information is essential to taking informed decisions by making different financial products comparable. Comparability protects the investor and triggers competition, which in the end will benefit the consumer.”
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