The Personal Investment Management & Financial Advice Association (PIMFA) has called on European regulators to continue as planned with the 31 December 2019 extension of PRIIPs regulation to cover EU retail funds.
PIMFA's position is at odds with that of the Investment Association (IA), which on Tuesday (2 October) called on the Financial Conduct Authority (FCA) to delay the extension until the "deeply flawed" regulation could be reassessed and reformed.
PRIIPs, which came into force for most fund products in January, requires asset managers to provide a Key Information Document (KID), a move that has been heavily criticised due to its controversial requirement to provide predictions of future performance as well as estimations of transaction costs.
The performance predictions have been described as "misleading" to investors, while the transaction costs requirements have already resulted in documents being printed with negative estimates. Most retail funds are currently exempt, but UCITS and non-UCITS funds will come under the scope of the regulation in 2019.
In light of these failings, the FCA published a call for evidence on the regulation, which closed on 29 September, ahead of a post-implementation review to be undertaken by 31 December 2018.
In its response to the regulator, PIMFA said PRIIPs was in "urgent need of review", but the regulation's extension to UCITS and non-UCITS retail products should go ahead as planned.
It explained: "Given that much of the confusion about the way in which product costs are calculated/presented derives from the fact that the different requirements of the PRIIPs and UCITS regimes continue to operate in tandem, PIMFA believe that the PRIIPs regime (albeit in need of urgent/considerable improvement) should be extended to UCITS within the timeframe originally specified".
PIMFA also said it was "concerned" by reports that the European Commission may defer the 31 December 2018 post-implementation review, and called on the FCA and other EU regulators to "put pressure on the Commission to stick to the original timeframe".
Outlining PIMFA's response to the FCA's call for evidence, director of UK regulation Ian Cornwall said: "PIMFA's feedback to FCA and the ESAs has made it clear that the almost exclusive focus of regulators on the challenges facing product providers in producing KIDs meant that distributors' questions and concerns were being accorded minimal attention even though these were the very firms that would be responsible for ensuring the delivery of KIDs to retail investors across a very large proportion of PRIIP transactions.
"Very few of the distributor issues that we identified in submissions to consultation papers and in discussions with policy staff were addressed by subsequent regulatory documents and PIMFA regard the FCA's Call for Input as an opportunity to highlight some of these issues again."
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