Fabian Demicoli

Better information urged for investors

 Proposals aim to ensure that consumers are given accurate information when investing money.
Michel Barnier, the European commissioner for the internal market and services, will next week publish proposals that aim to ensure consumers are given clearer and more accurate information when investing money.
The European Commission has been mulling over the introduction of
standardised rules to cover packaged retail investment products (PRIPS)
for several years. Barnier considers this proposal to be another
significant step in his overhaul of financial services legislation in
the wake of the eurozone crisis.
 
Barnier (pictured) will propose a regulation to harmonise consumer
protection and increase transparency in investment packages that
typically comprise several different financial assets put together by
investment firms.
The Commission, which carried out a consultation exercise at the turn of
the year, believes that the rules will go some way to addressing what
it sees as significant failings in the market for such retail
investments, namely the inconsistencies in the information given by the
firms producing and selling investments and the conflicts of interest
shown by those who give advice on products to consumers.
 
Different standards
The Commission believes that there is “unco-ordinated regulation” across
the EU, and that this has led to “significant differences in the level
of standards between sectors”, with some products not regulated at all.
The proposal, which will be published on Tuesday (3 July), will go
forward to the European Parliament and Council of Ministers, which must
reach agreement before it can become law. Disagreement is likely to
arise over the scope of the legislation, particularly in the type of
investment products it should regulate. Trade bodies have warned against
pension plans being subject to the rules.
 
As part of the legislative proposals, Barnier will announce a revision
of the undertakings for collective investment in transferable securities
directive (UCITS). This will introduce rules on the remuneration of
fund managers and sanctions to prevent excessive risk-taking.
He will also propose a revision of the insurance mediation directive
that will aim to strengthen the quality of information that insurance
product sellers are obliged to give and to regulate the remuneration the
seller receives.

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