EBA欧洲银行-BSG-response-to-Consultation-Paper-28EBA-JC-DP-2014-02292017-February-2015_23页_643kb

EBA Banking Stakeholder Group Summary on PRIIPS KID Discussion Paper

Core Content

The European Banking Authority (EBA) Banking Stakeholder Group (BSG) has provided detailed feedback on the Discussion Paper JC/DP/2014/02 on Key Information Documents (KIDs) for Packaged Retail and Insurance-Based Investment Products (PRIIPS). The paper is part of the preparation for Regulatory Technical Standards (RTS) under the PRIIPs Regulation, which aims to improve transparency and provide retail investors with clear, comparable, and understandable information about investment products.

The KID is intended to be a consumer-friendly document that outlines key features of investment products, including risks, returns, costs, and other relevant information. The BSG supports this goal and emphasizes the importance of clarity and simplicity in the presentation of KIDs to ensure that retail investors can make informed decisions.

Main Views and Key Information

1. Integration with Other Standards

• The BSG supports the integration of KID disclosures with other EU regulations, such as MiFID II, AIFMD, UCITS, Solvency II, and IMD.
• They suggest that the KID should not override other regulations but should align with them, especially where they already provide similar information.
• There is a call for better coordination with the Prospectus Directive, which may also overlap with KID content.

2. Risk and Reward Presentation

• The BSG agrees with the structure of the risk categories (market, credit, liquidity) but cautions against presenting them in a way that may confuse retail investors.
• They recommend that the risk description should be more comprehensive and include structural issues such as weak principal-agent relationships and arbitrage between fund structures.
• The BSG emphasizes the importance of presenting risks in the worst-case scenario, such as the loss of the entire investment.

3. Performance Scenarios

• The BSG believes performance scenarios should include a combination of absolute figures, monetary amounts, and percentages.
• They caution against the use of probabilistic modeling, as it may mislead consumers and encourage irrational investment decisions.
• They suggest that performance scenarios should be aligned with the time frame of the product's holding period and that the KID should be designed to avoid confusion.

4. Cost Disclosures

• The BSG highlights the need for transparency in cost disclosures, including both explicit and implicit costs.
• They recommend that costs should be presented as a single annual charge to improve comparability and prevent hidden fees.
• They emphasize that distribution costs should be clearly stated in the KID, and that any additional fees should not be imposed on the consumer.

5. Standardization and Presentation

• The BSG notes that standardizing cost and risk information across different PRIIPs is challenging due to varying structures and methodologies.
• They suggest that while a standardized format is desirable, some flexibility is needed to ensure accuracy and clarity.
• The BSG supports the inclusion of a link to the manufacturer’s website in the KID to provide access to additional information.

6. Other Sections of the KID

• The BSG believes that the KID should include information on the product type, but warns that product names often already convey this information.
• They support the inclusion of a "comprehension alert" to warn consumers of potential risks, though they consider it too simplistic.
• They recommend that the KID should clearly state the term of the product and the possibility of early redemption, as these are critical for consumer understanding.

Conclusion

The BSG advocates for a balanced, consumer-centric approach in the design of KIDs for PRIIPS. They emphasize the need for clarity, simplicity, and alignment with other EU regulations to ensure that retail investors are adequately informed. While they support the general objectives of the KID, they highlight the importance of avoiding overly complex or misleading information and ensuring that all relevant costs and risks are transparently communicated.