Alan Morgan-Moodie, chief executive of the Association of International Life Offices (Ailo), revealed to International Adviser that in a letter to independent EU regulators, the EC is proposing a “quick fix” to push through Priips guidelines, known as regulatory technical standards (RTS), to meet the new 2018 deadline.
This is despite the landmark rejection in September, which saw 602 MEPs vote to overhaul the current guidelines for introducing the key information document (Kid) – a three-page brochure designed to make it easier for retail investors to compare packaged retail and insurance-based investment products (Priips).
As a result, last week the EC confirmed a one-year extension for the Priip regulation, initially set to come into force in January.
Signposting of offshore funds
It was hoped the delay would provide time to clarify questions remaining around the regulation, which critics argue could “mislead” retail investors in areas like performance.
However, Ailo is calling on the European parliment to reject the second draft of the RTS, arguing that the ammendments fail to address the concerns of international life offices.
Morgan-Moodie slammed the EC over its failure to overturn a requirement that insurers must produce a Kid not only detailing features of offshore bonds but also the same level of investment information that a fund manufacturer must provide.
“There’s tens of thousands of funds out there. What we [Ailo] want is to go back to the level regulation where we [the industry] can signpost,” he said.
Unit-linked policies
Instead, the EC has proposed an amendment to the guidelines to allow signposting in Ucits Kids only, which Moodie describes as “inadequate” for unit-linked policies which can consist of thousands of funds including US mutual funds.
Moodie accused the EC of “short-termism”, saying if the RTS is fast-tracked before Christmas, as he suspects, it will have a detrimental effect on unit-linked life policies, which he describes as “the future of the offshore life industry”.
“The vast majority of domestic European life industry is not unit-linked yet, it is guarenteed returns and old with-profit type structures. So the future is unit-linked, there’s no other way for offshore life companies to survive,” he said.
Moodie argues that the Priips regulation in its current form, without the RTS, does not need changing and can be implemented as it would allow offshore insurers to “simply signpost” by providing website links to where a policy holder can go to find more information about all the funds they want to invest in.
