Revolution coming for those who have savings to invest. The European directive comes into force on Wednesday 3 January Mifid 2 and the regulation Priips, two sets of rules that oblige banks, investment firms and asset management companies to be more transparent with customers. The goal is to protect savers, helping them to invest more consciously. The change will also be significant from the point of view of intermediaries, even if many of them have already adapted.
Here are the main news.
1) SIMPLIFIED PROSPECTUS
It's called “Kid” (“Key information document”) and is a simplified prospectus of a few pages with all the information on costs, risks and the possible outcome of the investment.
In particular, the amount of all the will be specified in the "Kid". commissions. Beginning with those provided only to enter and to exit the investment, which can reach up to 5% of the value. Then there are the management fees (the fee for the intermediary's activity) e performance ones (the percentage of earnings that remains with the manager).
Making this information explicit and clear is a crucial step, considering that – as a survey by Sole 24Ore reveals – sometimes managers earn more than savers themselves.
With the "Kid" the choice of investments to bet on will become easier, because it will be possible to compare complex products in a few minutes. Each financial instrument will be assigned a risk score on a scale of 1 to 7 and for each it will be a performance forecast based on various market scenarios.
From next autumn, a similar obligation of clarity will also apply to insurance policies.
2) CONSULTANTS AND CONFLICTS OF INTEREST
The advisers to whom savers turn must always qualify as "independent" or "not independent”. It is a novelty of primary importance, because it avoids ambiguity and makes it possible to immediately understand when the consultant proposes investments in the sole interest of the client (in this case he is remunerated exclusively with a commission for the consultancy activity) and when instead the his recommendations are conditioned by the manager for whom he works.
3) NEW POWERS FOR THE AUTHORITIES
As for the supervisory authorities (in our country Consob e Bank of Italy, at the European level theEsma) will be able to block the sale of financial instruments that they deem dangerous for investors. Perhaps, if the Authorities had had this power a few years ago they would have prevented the placement of subordinated bonds by the banks that ended up in resolution, thus saving thousands of savers.
Read also: "Consulentia, Mifid 2: all the doubts of Foti, Molesini and Doris".
Watch theinfographic of the Abi on Mifid2 and Priips
Consultation the text of the directive Mifid 2.
