PIMFA has called on the Financial Conduct Authority to conduct an urgent review of the PRIIPs regime, arguing that a more radical approach is needed.
In response to the FCA’s ‘PRIIPs – Proposed scope rules and amendments to Regulatory Technical Standards consultation’, PIMFA said members had continually raised concerns about the nature of the packaged retail investment and insurance-based products (PRIIPs) Key Information Documents failing to reflect the way that most consumers approach investment and noting that the vast bulk of disclosure material is ignored.
The trade body said the Treasury and the FCA must commit to a timeframe for a review that considers whether the current PRIIPs-style approach to product disclosure is the right one or whether information could be provided to investors in more concise and effective ways. It argues that the FCA amendments only tackle the “very worst aspects” of the regime as they become apparent and do not constitute an approach that is in the best interests of either consumers or the industry.
While the FCA proposals have addressed some of PIMFA’s concerns, the industry is still left with a list of requirements that it labelled “largely unworkable.”
Liz Field, chief executive of PIMFA, said: “We know the FCA does not currently have the ability to institute a root and branch reform of the PRIIPs regime, however necessary this may be, and we welcome the regulator’s recognition of the flaws of the regime, as well as indications of future action to address them.
“But that still leaves our members and the industry at large to operate a set of requirements that have failed to provide investors with clear, comprehensible and worthwhile disclosures since their introduction.
“Although many of the amendments proposed in the current consultation are not necessarily objectionable of themselves, they are very clearly ‘sticking plasters’ aimed at providing short term relief from the most problematic elements of the regime without addressing its overall lack of cogency and effectiveness. This is why we are calling for a fundamental review of the entire PRIIPs regime as soon as possible.”
The Treasury previously stated that amendments to the Financial Services Act thus far targeted only the most pressing concerns with the PRIIPs regulation and it would conduct a more wholesale review of the disclosure regime for UK retail investors in the longer term.
However, PIMFA said in the meantime, the “dubious” quality of KID disclosures and their failure to meet their transparency and comparability objectives makes the question of whether the regime should continue to operate one that should be addressed urgently.
