31 October 2012, Brussels
The EU’s proposal will require that retail investors are shown a synthetic information document before purchasing so-called packaged investment products. Packaged investment products – a EUR 9 trillion market – include investment funds, insurance products linked to financial markets and structured retail investment products.The purpose of the proposal is to make information on investment products more intelligible and comparable for retail investors.
Finance Watch’s position paper calls on the EU to be more ambitious in its proposal. In addition to measures for a Key Information Document, it should also adapt the UCITS investment rules to prevent retail investors from being offered products that are not suitable for them. It should also give more information about the costs and impacts of structured products.
The paper’s author, Frédéric Hache, said:
“Clear, comparable information is essential to protect retail investors and we therefore welcome the Commission’s proposal. There is, however, some evidence that intervening only at the point of sale may not be enough to protect investors. With complex investment products, this is especially worrying.”
Thierry Philipponnat, Secretary General of Finance Watch, said:
“Investment products have social as well as financial consequences. If society wants capital to fund productive activity, the first step is to let investors know whether they are making an investment in the economy or a financial bet.”
For further information, please contact Frédéric Hache, senior research analyst, Finance Watch, at firstname.lastname@example.org or + 32 2 401 8720
NOTES FOR EDITORS
The European Commission adopted a proposal on 3 July 2012 for a regulation for a new Key Information Document (KID) to be produced by investment product manufacturers and provided to retail customers when they are considering buying investment products.
The expected timeline for the proposal is follows:
30 October – Council Working Group (national experts)
6 November – ECON exchange of views
Mid-November – ECON draft report
26 November – ECON presentation of draft report
December – ECON amendment deadline
20 March – ECON vote
8 May – Plenary vote
For further details of the proposal, including the text and the impact assessment, see the Commission webpage.