As the Treasury’s consultation on PRIIPs closes, Ben Blackett-Ord, Founder and Executive Chair at Bovill has commented.
He said: “The Government’s plan to reform the framework for retail disclosure by moving away from PRIIPs will generally be seen as a good thing. Scraping these overly prescriptive requirements and giving firms more freedom to set out product descriptors would be a welcome development, but it will be a fine balancing act. The more regulators prescribe, the less useful information is to investors, but if firms design their own information there’s always a greater risk of disclosures becoming promotional in nature.
“Reforming PRIIPs becomes particularly tricky in the context of another disclosure around sustainable investment products. The SDR asks providers to use specific investment labels, although this will not be mandatory. The approach for SDR is arguably a move in the opposite direction to the one suggested for the reform of PRIIPs, back towards more prescriptive requirements set by the regulator.
“It also highlights the UK determination to diverge from EU rules to create a more UK-focused regulatory regime and a more competitive financial services sector. These are important aims, but we are already seeing with the SDR how divergence can create headaches for firms trying to operate in both regimes.
“With the FCA’s drive to become ever more ‘data driven’ it would be reassuring to see some evidence on the impact of this kind of disclosure requirement on consumer outcomes. Will any of these changes meaningfully enhance consumers’ ability to make decisions?
“If we are going to see a divergence from EU rules let’s do it with more evidence-based regulation. This is the ideal place to demonstrate that a data-led approach to regulation can make a difference.”