Deloitte has said that current European Commission proposals could pose significant challenges for providers and distributors in the insurance and retail investment markets.

Commenting on European Commission proposals for Packaged Retail Investment Products (PRIPs) and a revision of the Insurance Mediation Directive (IMD II), the business advisory firm says that, while the Commission’s PRIPs and IMD II proposals are designed to level the playing field for the sale and disclosure of insurance and retail investment products and strengthen consumer protection, it will be difficult for firms to ensure that Key Information Documents (KID) will serve their original purpose.


Says David Strachan, co-head of the Deloitte Centre for Regulatory Strategy: "PRIPs proposes the disclosure of KIDs when investment products are sold to retail consumers. The principle behind KIDs is sound: consumers should have access to information that is easy to understand and facilitates straightforward comparison between investment products. If it achieves its aim, the KID has the potential to improve fundamentally consumers’ engagement with investment products. However, considering the wide range of investment products that will be covered, it will be a challenge for firms and regulators to ensure that KIDs will be of practical use to consumers and serve the purpose for which they are intended.

“While IMD II remuneration disclosure requirements aim to address potential conflicts of interest across sales channels, remuneration related to direct and intermediated insurance sales are different, and vary depending on the service," he added.

Strachan emphasised the need to ensure that consumers understand the context in which disclosures are made, and that they make use of this information, such that the Commission’s objective of a level playing field may not be undermined.

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