On 31 May 2022, the European Securities and Markets Authority (ESMA) published a speech by its chair, Verena Ross, entitled ‘Key priorities for EU retail fund investors’.
The speech focuses on the ESMA’s key priorities for European retail fund investors and key points include:
- In early May, the ESMA and the other European Supervisory Authorities (ESAs) published their technical advice to the European Commission on the review of the Regulation on packaged retail and insurance-based investment products (PRIIPs Regulation). The main message was that a significant number of changes to the PRIIPs Regulation are needed and that some outstanding issues cannot be fixed without amendments to Level 1.
- Performance and past performance information in the PRIIPs key information document (KID) is of key importance. On performance, in the ESAs’ advice it is recommended that the current requirement in the PRIIPs Regulation for ‘appropriate performance scenarios’ to be shown for all products, be replaced with the wording ‘appropriate information on performance’. The ESAs also support that past performance be included in the PRIIPs KID (and not in a separate document), as it is currently the case in the UCITS key investor information document.
- The ESAs also suggest that the PRIIPs Regulation be changed so that, where appropriate, in order to provide fair, clear and not misleading information to retail investors, different approaches can be taken between different types of products.
- The ESMA is publishing the outcome of the common supervisory action (CSA) on costs and fees for UCITS funds. Among other things, the CSA shows that there is room for improvement in the application of the ESMA supervisory briefing on the supervision of costs in UCITS and alternative investment funds. The CSA also showed that in some instances UCITS managers over-relied on delegated portfolio managers for the pricing of the fund.
- Demand for sustainable financial products remains strong. The ESAs will shortly publish a statement clarifying several areas of the regulatory technical standards under the Sustainable Finance Disclosure Regulation (SFDR) and it also plans to issue a comprehensive set of formal Q&As after the delegated regulation is published in the Official Journal on the practical application of the rules, covering the SFDR disclosures and the additional taxonomy-related product disclosures.