The European Council has adopted a regulation postponing the implementation of the rules on Packaged Retail and Insurance-based Investment products (Priips) by a year.
The decision, taken yesterday (8 December), means the rules will now come into effect on 1 January 2018 instead of this month, as originally planned.
It comes after the European Parliament blocked the Priips rules over concerns about the regulatory technical standards (RTS), including the future performance proposals.
Paul Stanfield, secretary general of the European Federation of Financial Advisers and Intermediaries, said: “It would seem that an element of common sense is now prevailing.
“The regulatory technical standards were inappropriate in part, unworkable in certain aspects, and definitely not entirely in the interests of consumers.
“We do have concerns, however, along with consumer groups and other trade associations such as AILO, that the European Commission is trying to apply a ‘quick fix’ to these issues that will fall well short of resolving them or addressing the worries expressed by the European Council and Parliament.”
Asset managers had previously campaigned against the change, and MEPs supported some of their contentions, voting against the proposals.
The main bone of contention was the proposal to ditch past performance figures from investor documents in favour of future projections, which had been labelled “potentially misleading”.
Because of the parliament’s objection, Priips cannot enter into effect and new regulatory technical standards are currently being drafted.
Back in November, the European Commission released a draft amendment to the regulatory technical standards, addressing three main elements:
- Multi-option Priips.
- Adding a fourth “stress scenario” to the existing three (unfavourable, moderate and favourable).
- Biometric risk.
The revised regulatory technical standards are now expected to be published by February 2017.
While hopes had been high ahead of the European Union membership referendum that Brexit would mean less red tape from Brussels for the financial services industry, experts have been swift to point out this is unlikely to be what happens.
Just last month Fiona Tait, pensions expert at Royal London, said regulation in the UK would have to remain equivalent to that in Europe.
She said: "We are going to have to keep being able to deal with the European market and if we want that we are going to have to have the same standards.
"The chances are we will go in the same direction as those standards have already been going."