Primary tabs

French Banking Federation (FBF)

Alain Richon
PRIIPs are products offered for portfolio/investment diversification purposes. Selling them helps to develop long-term savings and to take part in financing the real economy. While the Key Questions justifiably stress the risk of loss, a balanced presentation should be made that also highlights potential gains (under performance scenarios).
Yes, we do. No special remarks.
This is more the province of manufacturers. However, from the point of view of distribution, it is important that the result be presented in a synthetic and readable manner that is easily understood by both the distributor and the consumer.
We don’t exactly understand the notion of “contingent costs”.
Both the probabilistic or scenario-based approaches are possible from the distributor’s point of view.
To the greatest extent possible, it is necessary to stick to the provisions and practices already in effect for UCITS.
To the greatest extent possible, it is necessary to stick to the provisions and practices already in effect for UCITS.
Note: However, for the purpose of investor distribution and understanding, a standard for each category of PRIPPs would be necessary, while ensuring consistency with the product’s investment horizon. With this in mind, and for products with a fixed maturity, the scenarios should be calibrated to this maturity.
The rule should be consistent with MiFID, in line with provisions and practices already in force for UCITS and along the lines of customary practices, which have proven themselves and focus on percentages.
As KIDs and, more specifically, the scenarios are in the hands of the manufacturers, they must include only the costs known to the producers, while drawing clients’ attention to this point.
Three presentations of scenarios
It is better to be consistent with UCITS KID standards, with, preferably, a 1-to-7 risk scale. Where relevant, it would be better for the summary risk indicator to make a clear distinction between risk to invested capital on the one hand and performance on the other (see above, guaranteed-capital investment products).
Meanwhile, there is still the matter of whether a summary risk indicator can be set up that would apply to all products.
From the distributor’s point of view, it is important that they be easily understandable by advisors, who will have to explain the presentation(s) to investors.
Same answer as for question 13.
No comment on this.
No comment on this.
Same replay as for question 57.
From the point of view of distribution, the important thing for the client is to have visibility on the amount actually invested compared to the initial sum paid in.
See reply 16. For investors, price is what matters the most.
This indicator leads to a bias, as it lumps definite costs with estimated returns.
The client must be able to understand precisely the nature of cash flows paid to and received by the bank and in particular: (i) out of 100 initially paid in, how much will be actually invested in the product; (ii) the amount of fees that will be charged to him each year throughout the product’s life; and (iii) what will the product ultimately cost him, i.e., the amount of loss in the event that performance is zero.
To the greatest extent possible, it is necessary to stick to the provisions and practice already in effect for UCITS.
To the greatest extent possible, it is necessary to stick to the provisions and practice already in effect for UCITS.
To ensure overall standardisation and consistency, the approach chosen should be similar to the one already in effect for UCITS KIDs, even if that requires adding to it items and/or information that will provide a clear vision of the net return on the investment.
Moreover, a category-based approach to standardisation would help investors in their comparisons.
Option 5, as it helps limit the number of lines, which makes reading and understanding easier for distributors and their clients.
No comment on this.
It should be stressed that combining market, liquidity and credit risk within the same product does not necessarily lead to an increase in the product’s overall level of risk for the client, and it is indeed this overall risk that must be presented clearly to the client. For example, in the case of guaranteed-capital investment products (which are very common in times of low interest rates), there is generally little risk to principal (the counterparty risk for the guarantor), whereas performance risk, is, in essence, especially high (i.e., investment in highly speculative instruments, which alone are likely to provide a high return on investment in a low-interest-rate environment).
Based on an option 5 presentation, the information should be split into annual cost, in percentage and amounts.
No, as it is hard to understand by either the investor or advisors in the distribution networks.
A website, an email and postal address, the product name, its ISIN ticker, and its supervisor.
For the purpose of harmonisation and simplicity for the client, it would be better to use the criteria already set by various local regulators, in particular by the AMF (Position 2010-05).
Yes.
Yes. The major product families should be considered.
These are already in the UCITS KID. The recommendations from this consultation should be based on them and remain as close as possible to them.
No.
The definition of “consumer” types should correspond to the target market of end-clients provided in MiFID 2 and be broad enough so that it does not hinder implementation by distributors.
It must be equivalent to that presented in life insurance contracts.
No comment on this.
No, no specific challenges
No.
No.
Yes
Yes.
No comment on this.
No comment on this.
One KID per envelope and one KID per underlying are necessary.
Same reply as for question 46.
Same reply as for question 46.
It would be better for the items provided in the UCITS KID in this area to be used in PRIIPs:
Changes in fees, in particular, should be covered in a mere announcement and a document made available to clients.
It would be better for the UCITS KID items in this area to be adopted in PRIIPs: The KID is a pre-contractual document prior to selling the product.
Same reply as for question 50.
It would be better for the UCITS KID items in this area to be taken on in PRIIPs.
Yes, as consistency with MiFID is necessary.
No.
The same provisions as in the UCITS KID should be used here.
It should be explained to the client how regular payment options are likely to affect cash flows paid to and received from the bank (see Q21).
Same replay as for question 57.
The items used for assessing the impacts are rather piecemeal. As it is oriented towards manufacturers, it does not quantify those incurred for distributors during the work involved in integrating this new regulation in terms of either process or staff.
Determining assumptions used in the scenarios is more the province of manufacturers. Even so, it must be kept in mind that the items that matter to the client in comparing various offers are the amount actually invested and the fees paid. The other items are already subject to specifications in other laws, with which it is important to ensure a harmonisation.
+33 (0)148005071