PRIPs may include offshore products – EC says
Investment products not manufactured in the European Union may yet fall under the scope of the proposed Packaged Retail Investment Products legislation, said the European Commission Directorate General responsible for its development.
In a written response to InvestmentEurope, the EC Internal Markets and Services Directorate General stated that a number of respondents to its November 2010 consultation raised this issue specifically.
“The question of the application of the regime to products on sale in the EU to retail investors but not manufactured in the EU was raised by respondents to our November 2010 consultation, amongst other stakeholders. We are considering these responses as part of our work on finalising our proposals; our plan remains to adopt those on pre-contractual product disclosures first, by mid-July,” the office of Internal Market and Services commissioner Michel Barnier said.
The consultation period launched in November 2010 closed at the end of January 2011.
“All citizens and organisations are welcome to contribute to this consultation,” the EC said at the time. “Contributions are particularly sought from citizens, product originators, distributors and intermediaries, national governments and national competent authorities.”
It is not certain to what extent local regulatory authorities have responded: in the UK a spokesperson for the Financial Services Authority referred any questions on offshore products being affected by PRIPs back to the Commission.
The legislation is being proposed as part of the EC’s ongoing work to harmonise internal market rules governing financial products and services.
In the section on its website dedicated to the ongoing development of PRIPs, the Commission states that: “The retail investment market is largely dominated by ‘packaged retail investment products’. These provide retail investors with easy access to financial markets, but can be complex for investors to understand. Those selling these products can also face conflicts of interest since they are often remunerated by the product manufacturers rather than directly by the retail investors.”
“A complex patchwork of regulation has grown up to address these risks, and inconsistencies and gaps in the patchwork have raised concerns as to the overall effectiveness of the regulatory regime, both in relation to its capacity to protect investors and its ability to ensure the markets work efficiently. These concerns have been further heightened by the impact of the financial crisis.”
For details on the consultation click here:
For details on previous EC statements on PRIPs click here: