But shoehorning life assurance, investment trusts, structured products, derivatives and with profits funds into a Priips KID has led to a compromise that isn’t quite right for any of them and pensions will only complicate that.
8) Whether [reliable and accurate] online calculator tools which allow the retail investor to compute the aggregate costs and fees of Priips are available free of charge and, if not, the feasibility of developing draft regulatory technical standards setting out the specifications applicable to such Union-level tools
While product providers might consider providing calculators to help with disclosure, it’s questionable whether the added burden could be justified. A single industry-wide solution would be almost impossible to deliver, given the diversity of products and their different charging structures.
Likely impact: Priips KIDs include a pre-sale illustration of product costs on a generic basis, so they show “the aggregate costs and fees of Priips” for a single investment amount.
It’s not clear how much value a calculator would add, except to allow advisers to illustrate the actual amount being invested, but not to change the prescribed KID.
The Commission, regulators and industry will probably have enough on their plates without trying to produce an easy-to-use calculator of dubious value.
With all of these issues baked into the Priips regulation back in 2014, it is far from certain what the outcome of each of the reviews will be, but it can probably be taken as read that we won’t be going into 2019 without any changes to the product scope, content and calculations for Priips KIDs.
Mikkel Bates is regulatory consultant for FE
