Date: 23rd January 2018
Author: BETTER FINANCE
2018 has gotten off to a shaky start…
With the start of the New Year, the updated Markets in Financial Instruments Directive (MiFID II) rules came into force, requiring investment managers to reveal transaction costs that were previously not included in the ongoing charges information for Ucits funds.
Despite continuing opposition from the investment industry, the disclosure rules of the much-maligned MiFID II are already bearing fruit as investors are discovering that, once transaction costs are taken into account, they had been paying twice the amount in fees and charges previously disclosed.
But MiFID II is not the only new kid on the block… 2018 also witnessed the start of the implementation of the regulation regarding packaged retail and insurance-based investment products (PRIIPs) imposing a new standardised information document to parties providing investment products such as investment funds or life insurance offered to non-professional investors.
This PRIIPs regulation already ran into trouble… Financial media have reported on problems caused by the new PRIIP requirements concerning future performance and transaction costs disclosure in the overhauled Key Information Document (KID). This Regulation on Key Information Documents for Packaged Retail and Insurance-based Investment Products (KID for PRIIPs) requests PRIIPs manufacturers to publish a set of four scenarios indicating the future performance of the investment products:
– the stress scenario;
– the unfavourable scenario;
– the moderate scenario; and
– the favourable scenario