The fear that packaged investment products (such as units of collective investment schemes and unit-linked insurance products) do not deliver fair value for money is getting higher in the EU policy agenda. In the insurance sector, EIPOA has already developed its own methodology to categorize unit-linked and hybrid insurance products and has suggested indicators to build “value for money (VfM) benchmarks” to support supervision. EIOPA has also endeavored to minimize compliance costs in the collection of the data needed to build such benchmarks. The European Commission has proposed to introduce similar VfM benchmarks to guide manufacturers and distributors when engineering and, respectively, distributing PRIIPs. It is still unclear whether the Commission’s proposal will succeed, but these developments highlight a new regulatory approach to retail client protection and show the importance of structured data for the definition of yardsticks to which market participants and supervisors can refer. The chapter explores the strategy of the European Commission and assesses the pros and cons of VfM benchmarks as a supervisory and management tool. It also compares VfM with alternative (and lighter-touch) approaches to monitor and address issues related to the costs of financial products.
The Protection of Retail Clients through the Benchmarking of Costs and Performance
B. Alemanni;M. Siri
In corso di stampa
Abstract
The fear that packaged investment products (such as units of collective investment schemes and unit-linked insurance products) do not deliver fair value for money is getting higher in the EU policy agenda. In the insurance sector, EIPOA has already developed its own methodology to categorize unit-linked and hybrid insurance products and has suggested indicators to build “value for money (VfM) benchmarks” to support supervision. EIOPA has also endeavored to minimize compliance costs in the collection of the data needed to build such benchmarks. The European Commission has proposed to introduce similar VfM benchmarks to guide manufacturers and distributors when engineering and, respectively, distributing PRIIPs. It is still unclear whether the Commission’s proposal will succeed, but these developments highlight a new regulatory approach to retail client protection and show the importance of structured data for the definition of yardsticks to which market participants and supervisors can refer. The chapter explores the strategy of the European Commission and assesses the pros and cons of VfM benchmarks as a supervisory and management tool. It also compares VfM with alternative (and lighter-touch) approaches to monitor and address issues related to the costs of financial products.
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