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LPeC Regulatory Committee

Chaired by Aaron Stocks of Travers Smith, LPeC's Regulatory Committee has submitted responses to the FCA consultations on their initial experiences of the PRIIPs Regulations.

Similarly, in November 2018 the Joint Committee of the European Supervisory Authorities (which includes ESMA) (the "ESAs"), published a draft set of amendments to the PRIIPs Regulation, requesting feedback from market participants on those proposed amendments. It is intended that any such amendments will be effective from 1 January 2020.
 
LPeC submitted responses to each of these consultations setting out LPeC members' various and serious concerns with the ways in which the PRIIPs Regulation affects LPeC members. In particular, LPeC does not believe that the ESAs' proposed amendments to the PRIIPs Regulation would, or could possibly, address the concerns which it has raised regarding the operation of the PRIIPs Regulation.
 
Both the FCA and the ESAs are expected  to provide feedback on the responses received to their respective consultations in Q1 2019.
 
The latest FCA session on PRIIPs was a seminar on transaction costs which they used principally to tell the audience that from their review of KIDs with unusual transaction costs (zero or negative), many were generated by arithmetic errors.  They accepted that their sample was small and entirely focused on mainstream equities funds, but gave no guidance on interpretation of transaction costs for any alternative asset classes.  A link to the slides they used is below.
 
https://custom.cvent.com/97711B9A58C347AD93190D15A5611618/files/38c371ef6ef8443c9c4fa29e52ffc939.pdf
 
We used the occasion of the event to once more push for a suspension of the regime or a scope decision which could take LPeC members out of the PRIIPs regime.  The FCA's policy team seems to meet the request with sympathy, but a hope that the ESAs or ESMA can be persuaded to take that view so that the FCA does not have to be the deciding body.  There seems to be strong reluctance to be seen to go out on a limb on policy matters during the current Brexit political situation.  We will update you on any further developments.

Read LPeC’s response to the FCA on the call for input to the PRIIPs regulation