MiFID II and PRIIPs: AMAFI at the European Parliament

As part of ongoing negotiations on the Retail Investment Strategy (RIS) at the European Parliament's ECON Committee, AMAFI Chairman Stéphane Giordano and several members of the European Action Committee met with MEP Stéphanie Yon-Courtin, rapporteur for the RIS.

On the MiFID II review, AMAFI stressed the following issues:

• It opposes the partial ban on inducements, as proposed by the European Commission, and therefore supports the Rapporteur's position.
• On the value-for-money proposals, which form part of the product governance regime and whose primary goal is to ensure that the industry produces and distributes only financial instruments that add value for investors, AMAFI said that if the benchmarks used to compare products within the same class were to be kept, they should be established by the industry, not the European Supervisory Authorities, for reasons of feasibility.
• AMAFI also supported Ms Yon-Courtin's proposal to review the RIS in five years rather than three, so that any assessment will be based on substantiated findings.
• In addition, AMAFI voiced serious concerns about the number of mandates that are supposed to be entrusted to ESMA. The supervisor’s approach may be overly prescriptive when it comes to clarifying essential points, such as the best-interest test to ensure that retail customers are offered products with the optimal cost/benefit trade-off based on their preferences.

On the PRIIPs review, AMAFI said that it broadly opposed the European Commission's proposals (AMAFI / 23-64), which Ms Yon-Courtin took up in her draft report, and called for greater regulatory stability. It also stressed the need for consumer tests to make sure that the new transparency obligations are truly beneficial to customers, while emphasizing that plain vanilla products should be excluded from the scope of PRIIPs.

AMAFI also broached RIS-related topics with the policy advisor of the Progressive Alliance of Socialists and Democrats (S&D), and with the office of Finnish MEP Eero Heinäluoma, who represents the S&D Alliance on the ECON Committee negotiating team.

Plain vanilla products

Acting alongside other members of the European Forum of Securities Associations (EFSA), AMAFI wrote to the European Commission and ESMA protesting the undue regulatory barriers hindering the distribution of plain vanilla shares and bonds to retail customers, at a time when the European institutions want to make it easier for these investors to access financial markets.

In their response, the European authorities merely encouraged the associations to submit their points as part of the ongoing work on the RIS, which is what AMAFI has already endeavoured to do through its efforts to convey this message to national authorities and members of the European Parliament. We were therefore pleased that Ms Yon Courtin presented an amendment to the ECON Committee proposing to exempt all non-packaged financial instruments – including plain vanilla shares and bonds – from product governance obligations.