Sinn Féin MEPs seek real protection for retail investors
A European Commission proposal regarding protection for retail investors in insurance-related products was rejected overwhelmingly today by the European Parliament’s Economic and Monetary Affairs (ECON) Committee.
Sinn Féin MEPs voted to reject the proposal as it may provide investors with misleading and overly optimistic views of the performance of their investments.
The proposed delegated regulation sets the terms on which the Packaged Retail and Insurance-Based Investment Products (PRIIPs) industry is required to provide potential investors with a Key Information Document (KID).
The KID is a standardised three-page disclosure document that must be provided to potential investors that outlines risk, costs and performance scenarios.
Sinn Féin Matt Carthy MEP, a member of the PRIIPs negotiating team,said:
“PRIIPs in Europe make up a market of about €10 trillion, so we are in full support of proposals to make this market less volatile and more strictly regulated, in a way that benefits retail investors. These products are what are usually offered by banks to everyday customers when they want to make an investment – for example, buying a house.
“These reforms arose out of the financial crisis, and they are designed to protect ordinary people from financial industries that sell high-risk and inappropriate products without providing investors with accurate information.
“Sinn Féin has made it clear that we support the implementation of the KID requirements as soon as possible, and we would still like to see it rolled out by the original deadline of the end of this year,” he added.
“But we also need to make sure we get it right. During our negotiations, concerns were raised about the methodology used in the KID, which provided overly optimistic results regarding the performance of the investment in future. This could mislead people into thinking their investment would perform much better than it will in reality."
"If the purpose of this reform is consumer protection, we need to make sure the information and warnings they are provided with are correct. At the same time, we reject claims pushed by industry lobbyists that were promoted by conservative MEPs, which attempted to water down disclosure requirements,” he argued.
“Today’s positive result was that the amendments by GUE/NGL and the Greens Group – which addressed the future performance issue and called for a standardised approach to the use of a comprehension alert for complex products – were passed by the Parliament’s ECON Committee.
"GUE/NGL also successfully amended the resolution in order to remove the calls for diluting consumer protection in regards to the calculation or risk and costs.”
“We urge the Commission to address the issues we’ve raised as quickly as possible so that we can proceed with rolling out this important reform, and we will reject any future attempts by the financial lobby to weaken the level of protection,” Carthy concluded.