EU Boost UCITS' Oversight To Assist Investors

By Editorial 24 April, 2014

The European Fund and Asset Management Association (EFMA) has welcomed the adoption by the European Parliament of two important pieces of legislation to enhance safeguards for individual investors.

The changes aim to ensure that small investors are better protected against investment funds that take excessive or unnecessary risks with their money. These rules clarify who is liable for the mismanagement of funds, and tailor fund managers' remuneration rules to encourage them to take reasonable risks and a long-run view.

UCITS, which gather assets from small investors and pool them to buy bonds, shares, or other financial products, manage about 85 percent of the European investment fund sector's assets.

The amendments to the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive will raise the standards of protection enjoyed by UCITS investors, EFAMA said. They should also bolster the international recognition of UCITS as the vehicle of choice for the international distribution of investment funds, it added.

EFAMA also welcomed an agreement on the Key Information Document (KID) required under the Packaged Retail Investment and Insurance Products (PRIIPs) Regulation. KIDs are short, plainly-worded documents – no more than three pages long – that will provide investors with answers to the key questions they have about the features, risks, and costs of investment products.

Peter De Proft, Director General of EFAMA, said: "EFAMA welcomes the adoption of the PRIIPs regulation. From the beginning, we have been strong supporters of this initiative. It is an important step towards a better protection of retail investors. The Key Investor Document – a synthetic, plain language document already well-known to UCITS investors – will enable them to make better informed investment decisions and will facilitate comparisons between different types of retail investment products, therefore contributing to a level playing field across competing retail products."

EFAMA said it will work with the European Commission and the European Securities and Markets Authority to implement these measures.

Tags: Insurance | Investment | European Commission | Investment Funds | Legislation | Standards | Regulation | Retail | Expats | Investment | Europe | Invest | Investment |


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