The European Fund and Asset Management Association (EFAMA) has announced its full support for the Packaged Retail Investment Products initiative (PRIPs) - which seeks to address issues of investor protection and the lack of a level playing field in the distribution of retail financial products across the European Union - in response to the European Commission consultation on the initiative.

According to EFAMA, a level playing field needs to be ensured between different savings products to properly protect the interests of investors and bring true efficiency to the single European market.

This means that distribution standards across product categories must be equalised and transparency at the point of sale needs to be improved and harmonised. The PRIPs initiative taken up by the European Commission is a crucial initiative to deliver these goals, it stated.

However, EFAMA added that it is not convinced that the European Commission is being ambitious enough in its approach, as indicated by the way the initiative has been split into many legislative dossiers and the scope of the proposals has been defined narrowly.

EFAMA’s recommended that not all pensions should be excluded from the PRIPs initiative: specifically, personal, voluntary pension products should be covered by the initiative, because when choosing such products the investor will be making decisions where she/he is in particular need of adequate transparency and investor protection.

Commenting on the European Commission consultation, Peter De Proft, director general of EFAMA said: “It is to be welcomed that after many years of preparation the Commission is taking this initiative forward. EFAMA strongly believes that PRIPs is a crucial initiative to enhance investor confidence in saving for their future needs.

“What we need are common European rules which ensure transparent investment products and distribution, where the investor knows what she/he is buying, what the costs and risks are and on which basis the distributor is recommending a certain product. This is a unique opportunity to promote investor protection to the benefit of us all, and I sincerely hope the Commission will push this initiative forward with all the necessary determination. The asset management industry is ready to play its part in this initiative.”

Julie Patterson director of authorised funds and tax at the IMA responded to the consultation. She said: "We welcome the PRIPs initiative, which should enable consumers to make informed choices, while levelling the competitive playing field across financial products.

“However, we are concerned that delivery of the initiative will be through three different pieces of legislation. The Commission must ensure that all competing investment products are subject to the same overarching set of disclosure rules across the European Union. Legislation must create a harmonised approach to selling practices for all PRIPs and align requirements to benefit consumers."

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