Priips: Trade body tells FCA to suspend fund calculations

RegulationA UK fund management trade body has called for a suspension of certain fund calculations that it describes as misleading.

The call from The Investment Association (IA) form part of a package of “solutions to the flaws” of a key piece of EU fund regulation, known as Priips.

Priips – the Package Retail Insurance-based Investment Products regulation – has been the focus of a ‘call for input’ by the UK’s Financial Conduct Authority (FCA) following criticism from various organisations of the valuation methodologies used in products that are subject to the Priips regulation.

The IA said the “failings in the design of Priips” also impact retail funds and the UK defined contribution (DC) pensions market and so the FCA should act immediately to replace the calculation methodologies.

The IA also called on Europe to delay the extension of Priips to the wider European fund market until an “evidence-based” solution was found.

Chris Cummings, chief executive of the IA, said: “Urgent action is now needed by the FCA to address the flawed methodologies of Priips which are having harmful consequences for savers and investors across the UK retail and DC pensions markets.

“The FCA rightly called for evidence of investor detriment caused by the new rules. It has been delivered. The case is now proven and it’s time for action.”

Cummings claimed the IA had offered “pragmatic solutions” to ensure customers were provided reliable and clear cost information and said the asset management industry was “committed to delivering crystal clear cost transparency”.

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