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IPE Views: Controlling the sale of pension products

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  • The European Commission

Any chance for a tightening of rules controlling the sale of pension products looks lower than ever if the European Parliament in plenary session at Strasbourg, dealing with the Insurance Mediation Directive (IMD), is anything to go by.

A report on the revised version of the IMD passed through, with the insurance industry’s pensions sector left out of its scope. If otherwise, moves to bring the occupational sector into line would be expected eventually – however far that ‘eventually’ might be down the timeline. The final text of the revised directive now has to be agreed, in trialogue, by the European Commission, member state national governments and Parliament. InsuranceEurope, the federation, expects that this will be after the end-of-May Parliamentary elections.

Unsurprisingly, the federation writes that it is “pleased” with the Strasbourg outcome. It likes the fact the report confirms that various powers will remain in the hands of EU member states. In a press release, it writes that it is up to them to decide whether to prohibit or further restrict tight rules on, for instance, sales commissions, when selling insurance investment products. 

However, perhaps surprisingly, leaders of reformist groups in Brussels also welcome the Strasbourg development. This is despite the fact they are in a stag-like, head-to-head battle with much of the insurance and occupational pension based sector. For example, MEP Sven Giegold greets the Strasbourg development as a step forwards. He approves of the fact the majority of MEPs support the general principle of disclosure of commissions to brokers. The German Green Party clearly likes the idea of “More light shining on the existing high cost of insurance sales”. Likewise, support for Giegold’s position comes from Guillaume Prache, head of the European Federation of Financial Services Users. This body represents more than 4.5m individual pension savers. However, Prache’s warmth is tinged with the view that “We will still be facing the issue for non-insurance regulated pension products”.

Closer to the firing line for tightening rules concerning sales of occupational pensions, but probably still far off, is the proposal for a regulation on packaged retail investment products (PRIPS). This would bring in a short-form, descriptive sales document – a new Key Information Document (KID) – to be supplied to purchasers of investment products at the point of sale. Here, a key contention is the inclusion of the KID regime for occupational pensions, which is strongly rejected by, among others, PensionsEurope.

According to an official in the office of Giegold, the possibility of the scheduled clearance through trialogue of Prips before the election shutdown is now fading by the day. Discussions continue, he tells IPE, but national governments are holding up progress by seeking to reduce the scope of the requirement. This is despite the fact pensions are, for some time to come, excluded.

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