Response to first ESA discussion paper on PRIIPs Level 2
Finance Watch response to the first discussion paper on PRIIPs Level 2 published by the Joint Committee of the three European Supervisory Authorities.
Our consultation response covers, among other things:
- the comprehension alert, a label to warn retail investors who are considering buying a complex product that the product is not simple and may be difficult to understand. Finance Watch welcomes a strict interpretation of the Level 1 text, which should make it easier for product manufacturers to know when to apply the label. For example, where a product offers a number of options, labelling should apply to the whole product if any of the options on their own would be hard to understand.
- the summary risk indicator, a proposal for a simple grade that tries to show a product’s investment risk, accompanied by a text explaining the indicator’s limitations. Finance Watch warns against potential industry lobbying to water down the indicator or make it less transparent about the risks hiding inside a product, and urges the Joint Committee to carry out further consumer testing in this area.
31 October 2013, Position paper on PRIPS "Towards suitable investment decisions?"