Out-Law News 1 min. read
11 Apr 2016, 10:04 am
The Joint Committee of the European Supervisory Authorities (JCESA) have published their regulatory technical standards on KIDs and said that they will ensure retail investors in all financial sectors across the EU will have access to simple and comparable information for the first time. The JCESA is made up of the European Securities and Markets Authority, the European Banking Authority and the European Insurance and Occupational Pensions Authority.
A three page document will need to be made available for each product, detailing the risks, performance and cost. The new standards will enhance consumer protection in banking, insurance and securities, the joint committee said.
Gabriel Bernardino, chairman of JCESA, said: "These new rules are a major step forward for consumers. They are an innovative and pioneering new approach to risk, performance and cost disclosures that we believe lays a strong foundation for the future. Now, for the first time, consumers can easily compare different products and make informed investment decisions fitting their particular needs."
The new rules cover the text and layout to be used in the documents. Each product will be rated out of seven for both the risks and rewards of products. A methodology has been developed showing how each product should be rated.
The rules explain how firms should present performance scenarios and costs. Certain products will need extra warnings and explanations, and specific layouts and contents have also been given for those products offering multiple options that cannot be effectively covered in three pages, the statement said.
Each KID must be revised and republished every year, the joint committee said.
Retail investors must be given the documents early enough to take the contents into account when making an investment decision, it said.
The new rules have been submitted to the European Commission for endorsement, and are scheduled to come into force on the 31 December.