The Priips regulation has “serious and complex flaws” and must be amended before it comes into force in 2020, the German Investment Funds Industry Association (BVI) has said.
The Packaged Retail and Insurance-based Investment Products Regulation is aimed at increasing the transparency and comparability of investment products.
It is the latest criticism for the regulation which has been embroiled in controversy recently.
The BVI criticised the replacement of an established Key Investor Information Document (KIID) with an “inadequate” Priips KIID.
The association said Priips’ calculation of performance scenarios using past data would give rise to distortions.
It also objected to transaction cost calculations using a method which was “not customary in the market”. It warned that in less liquid markets such as bonds the method could lead to incorrect or negative transaction costs
The association called for the start date for the new Priips KIID to be postponed by 24 months to January 2022.
Thomas Richter, chief executive officer of BVI, said: “The Priips information sheets need to be revised, especially the information on costs and performance. The EU Commission should use the review of the Priips rules scheduled for the end of 2018 for this purpose.”
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