The European Parliament’s Economic and Monetary Affairs (Econ) Committee has voted to halt the progress of the Packaged Retail and Insurance-based Investment Products (Priips) regulation, scheduled to come into force at the end of this year.
In a tense parliamentary session, the commitee backed a vote to reject the Priips delegated act – which encompassses regulatory technical standards (RTS) - because it proposes that past performance figures be replaced with “future performance scenarios” in the key information documents (Kids).
Asset managers have previously campaigned against the change, and MEPs supported some of their contentions during the debate. UK MEP Syed Kamall said introducing future performance projections ran the risk that investors would not realise they could lose money.
The vote saw 55 MEPs reject the act, with three abstensions and no approvals. Rejection by the committee means the vote will now go to the full European Parliament on September 12.
But MEPs expressed a willingness not to reject the rules outright during a debate which saw the European Commission and the European Insurance and Occupational Pensions Authority (EIOPA) urge for the act to be approved.
Several members of the Econ committee also suggested sticking with the original timeframe, which would see Priips introduced on December 31 this year.
However, they said they could not approve the delegated act with the future projection requirement still in place. They also voted against allowing the legislation to pass without an approved set of RTS.
The Priips regulation’s lead in the European Parliament, French MEP Pervenche Berès, said after the vote: “We call on the negotiating team to get to work as quickly as possible to identify those points where we need the Commission and EIOPA to hear the Parliament’s concerns.
“We have had a formal discussion based on principles but we need them to show goodwill and creativity to find solutions to the outstanding points.”
Earlier in the debate the Commission and EIOPA had called on MEPs to back the proposals, suggesting the current system was the “best compromise” despite accepting it was not an ideal option.
But MEPs angrily rejected the notion of approving rules which they said may mislead investors and fail to benefit consumers.
Italian MEP Roberto Gualtieri, chair of the Econ committee, said: “We have to make compromises but I am not assured that [Commission and EIOPA’s] argument is a compromise.
“If for the sake of compromise we produce documents that should provide comparability and do not do that, then what is the point of the compromise?”
Several other German, Irish and UK MEPs also rejected the notion that Parliament should approve standards without considering other options
EIOPA chair Gabriel Bernardino said Parliament, the Commission and his own organisation should work together to avoid any legal uncertainties for the investment and insurance industries.
“Implementation without regulatory technical standards will lead to legal uncertainty. If we only have principle-based [legislation] it will be difficult to achieve consistency across the single market. Our intention is to have a solution as soon as it will be possible.”
