The European Commission has finalised a revamped version its Packaged Retail and Insurance-based Investment Products (Priips) regulation following the rejection of last year's proposals by the European Parliament.
The now confirmed revised regulatory technical standards (RTS) - which set out rules for Key Investor Documents (Kids) - mean a fourth performance chart will take position alongside the hotly debated three 'future projection scenarios'.
Investors will now see future projections based on 'Unfavourable', 'Moderate' and 'Favourable' circumstances, but also an additional 'Stress' scenario, after European Parliamentarians (MEPs) and fund groups warned investors could be mislead by the original plans.
However, the Commission has opted not to change underlying methodology used to calculate these future projections, despite previous criticisms from MEPs.
In the interim consultation period, the Commission did propose a new methodology, but this was again rejected for being too conservative. The body has thus opted to revert to its old calculations.
The fight against last year's proposals stemmed partly from concerns about the methodology, but also broader issues about the use of future projections instead of past performance. Industry bodies had campaigned for the inclusion of past performance data, but the Commission has disregarded these calls.
Vanessa Mock, a Commission spokesperson, said: "With these changes, the Commission is able to meet our goal of ensuring that consumers will easily be able to compare different Priips.
"We have also sought to maintain a level-playing field between different sectors of the financial industry."
Sven Giegold, a Green MEP at the forefront of the group that rejected last year's proposals, said the new RTS would receive a warmer welcome than its predecessor.
The revised RTS must now be approved by the European Council and Parliament, but Mr Giegold suggested votes would take place quickly, and be positive. Fund and insurance groups would then have until January 2018 to prepare for the changes.
On the revised rules, Mr Giegold said: "It is important this fourth scenario is here, as [under old rules] even risky products would have always [shown] upwards [trends]. The original RTS was bad drafting – so this is the most important change and this was always our core demand."
The MEP, who was one of those who criticising the overly conservative methodology underpinning the Kid, welcomed a move back to the original despite his earlier concerns. However, he said further work could take place once the Priips rules were in place.
"Moving back to the old methodology is more appropriate than the [interim] changes they made, so I am happy they moved back," he said.
However he added: "Beyond that, you can discuss the details of the calculation method and it might have to be reviewed in the future, and there are legitimate views on that. But we have discussed long enough and should start implementing this now."
The rules, set to come into force in January 2018, will not apply to Ucits products until two years after that point.
