The framework for what will be included in the Kids, published on Tuesday in the Official Journal of the European Union, set out level 2 implementing measures for what it classifies as packaged retail and insurance-based investment products.
But the European Fund and Asset Management Association (Efama) said the EU regulators had “discarded some of the major concerns” voiced by both European asset managers and consumer groups.
Efama specifically objected to the ruling that no historic performance will be shown in the Kid, arguing that even if past performance is not necessarily an indication of future performance, it can be based on historical facts presented in a standardised way, which shows how an investment product was able to meet or exceed its objectives.
It also said the EU’s methodology for the calculation of the transaction costs has been based on erroneous assumptions, which can mislead investors into believing that a product is more, or less, expensive than it is in reality.
Efama further said costs are now averaged over a product’s recommended holding period, which means that retail investors will no longer be able to compare costs of the same products if these have different holding periods.
Peter De Proft, director general of Efama, said: “Efama has been systematically alerting EU policymakers, throughout the legislative process, of the potentially negative consequences of part of the Priips rules on investors.
“We have repeatedly suggested practical solutions to address these concerns without undermining the policy objectives of the Regulation. We are deeply disappointed that insufficient attention was paid to these concerns, which Efama, Better Finance and the CFA Institute defended in a unique alliance. When rules are proposed to protect and benefit investors, their concerns should certainly not be dismissed.”
In November last year, Alan Morgan-Moodie, chief executive of the Association of International Life Offices (Ailo), voiced concerns about a “quick fix” to push through some of the Priips guidelines.
The Kid regulations are due to come into force on 1 January 2018.