Rejection of the PRIIPs Regulatory Technical Standards ( “RTS”) by The European Parliament’s Economic and Monetary Affairs (ECON)
The European Parliament’s Economic and Monetary Affairs (ECON) committee has overwhelmingly voted ( 55 to 0) in favour of rejecting the PRIIPs Regulatory Technical Standards ( “RTS”) and the next step in the process is for the RTS to go before a full session of the European Parliament commencing next Monday the 12th of September.
The main areas of concern related to:
- Flaws in the calculation of future performance scenarios that will not lead to “accurate, fair, clear and not misleading” results as requested by the regulations;
- The inclusion of biometric costs in overall costs being misleading and placing insurance products at a disadvantage;
- The lack of the clarity in relation to the treatment of multi-option investment products;
- Lack of clarity over the circumstances in which a comprehension alert should be applied
In the interim, the European Commission will work with the ECON committee to try to address these concerns. Whether the European Commission can do enough to overcome the objections of the MEPs before next Monday seems unlikely but we will have to wait and see. It is clear; however, that some revision to the RTS will now take place.
As it stands, the implementation date for PRIIPs remains 1st January 2017. This date is set in the Level 1 regulation which still remains in-force. There was agreement amongst the MEPs and the Commission that the PRIIPs regulations should be implemented as soon as possible so we expect they will attempt to avoid any undue delay but one may be unavoidable at this stage.
It is only next week when we are likely to have clarity over the implications of the motion to reject the RTS and what it means in terms of any potential postponement to the implementation of the PRIIPs regulations.