Response to first ESA discussion paper on PRIIPs Level 2

17 February 2015

Consultation response

Finance Watch response to the first discussion paper on PRIIPs Level 2 published by the Joint Committee of the three European Supervisory Authorities.

Our consultation response covers, among other things:

  • – the comprehension alert, a label to warn retail investors who are considering buying a complex product that the product is not simple and may be difficult to understand. Finance Watch welcomes a strict interpretation of the Level 1 text, which should make it easier for product manufacturers to know when to apply the label. For example, where a product offers a number of options, labelling should apply to the whole product if any of the options on their own would be hard to understand.
  • – the summary risk indicator, a proposal for a simple grade that tries to show a product’s investment risk, accompanied by a text explaining the indicator’s limitations. Finance Watch warns against potential industry lobbying to water down the indicator or make it less transparent about the risks hiding inside a product, and urges the Joint Committee to carry out further consumer testing in this area.

See also:

12 June 2013, Finance Watch response to the IOSCO consultation on the regulation of retail structured products

19 April 2013, Discussion paper on product rules for retail investment products

31 October 2013, Position paper on PRIPS “Towards suitable investment decisions?”