The European Fund and Asset Management Association (Efama) has called for the “urgent completion” of a review by the European Commission of the key information document (KID) that forms part of the Packaged Retail and Insurance-based Investment Products regulation, known as Priips.
In a public statement, the pan-European funds body said that current Priips KIDs are fundamentally flawed and provide retail investors with “misleading” information. According to Efama, an urgent review of these flaws is both overdue and essential.
As the covid-19 crisis continues to bring unprecedented uncertainty, Efama said that the asset management industry “stands poised” to play its part in assisting on the long road to recovery.
However, to achieve this, a Priips KID that provides retail investors with the correct information has become ever more crucial in helping them make informed investment decisions, the association said in an open letter to the European Commission, MEPs, and the European Supervisory Authorities ESAs.
Efama director general Tanguy van de Werve said: “While the last few years have clearly shown there are no quick fix solutions to the Priips KID, we remain confident that most issues can be resolved successfully.
“We simply must avoid continued misinformation to retail investors and damaging the Ucits brand by extending the currently flawed Priips KID. Time is now of the essence.”
A spokesperson of the German fund association BVI, which has long campaigned for the reform of the Priips regime, said that past performance has to be included in the KID in addition to performance scenarios.
“The EU Commission has recently found in its consumer study that investors’ understanding of the performance prospects of products is greater if forward-looking performance scenarios are supplemented by information on past performance.
“The Commission has to close this gap and finally remedy other serious Priipss shortcomings, such as the incorrect calculation method for transaction costs, so that fund investors can also receive useful Priips KIDs from the beginning of January 2022.”
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