The European Fund and Asset Management Association has urged the European Commission to relax its controversial performance forecast regulations or risk their sector being left behind by the UK after Brexit. The leading trade group wants Packaged Retail and Insurance-based Investment Products Regulation, which requires firms to publish key documents to would-be investors, should be renounced until a full policy review can be carried out. Priips was introduced in 2018 with the hope of making investment products easier to understand.
But critics claim the regulation is cumbersome and unreliable with firms ordered to make public performance projections in different market conditions.
In a letter to the Commission, Efama has urged eurocrats to fix the flaws to “avoid further confusion among investors and preserve the worldwide eruption of the Ucits framework”.
EU retail funds – Ucits – do not have to comply with Priips until 2020.
Efama fears this doesn’t give enough time to fix the flaws regulation and wants the exemption to be extended.
Brussels’ attempt to broker a fresh solution is deadlocked after months of fighting between politicians and regulators.
While the EU talks stall, the Government last week issued detailed plans to change the Priips rules from next year.
Under the blueprint, UK investment will be permitted to ignore the rules for up to five years while the Treasury reviews its investment product disclosure framework.
Andreas Stepnitzka, a senior policy adviser at Efama, claimed the UK’s move would give it a competitive advantage over the EU’s fund industry.
“It’s concerning to note that the first areas of divergence between the EU and UK will be the Priips,” he told the FT.
“Does the UK believe that a more investor-friendly framework will be a main selling point for the UK’s post-Ucits regime?
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Mikkel Bates, a regulations manager at FE fundinfo, claimed the Treasury’s announcement provided little help to asset managers with funds based in the EU.
He said: “The Treasury no longer has any influence over EU regulators or legislators, so cannot get involved over disagreements concerning what to include in the Priips disclosures in Europe.
“Until this is resolved, any sensible changes from the Treasury will only drive the UK further away from the standards set beyond our shores.”