Retail Distribution Policy
Strategy & Com petition
Financial Conduct Authority
12 Endeavour Square
London E20 1 JN

Re: FCA Call for Input: PRIIPs Regulation- initial experiences with the new requirements

Dear Sirs

The Asset Management Group of the Securities Industry and Financial Markets Association (“AMG”) appreciates the opportunity to provide feedback on the Financial Conduct Authority’s (“FCA”) call for input on the PRIIPs Regulation.

The AMG brings the asset management community together to provide views on U.S., European and global policy and to create industry best practices. AMG members are US, UK and multinational asset management firms with combined global assets under management exceeding $39 trillion.

The clients of AMG member firms include, among others, tens of millions of individual investors, registered investment companies, endowments, public and private pension funds, UCITS and private funds such as hedge funds and private equity funds. 1

On behalf of its members, the AMG has three key points to feedback to the FCA on the PRIIPs regime:

1. Transaction costs: The PRIIPs arrival price I slippage methodology for calculating transaction costs does not work (particularly for non-equity products) and is resulting in misleading costs figures being reported to investors. We recommend the adoption of alternative spread based methodologies instead, which in our view will be a more representative measure of transaction costs. To ensure harmonisation, we would recommend that this approach is also adopted for the calculation and disclosure of transaction costs in workplace Defined Contribution (DC) pensions.

2. Performance scenarios: As calibrated, the PRIIPs rules on performance scenarios give a misleading and distorted impression to investors of future fund performance. We recommend that the PRIIPs regime be amended to allow for past performance data to be disclosed instead of, or at least in addition to, the performance scenarios, so that investors have a more reliable and transparent reference point to assess the fund’s performance (i.e. its previous track record).

3. Delay for UCITS and non-UCITS retail funds: Finally, we recommend that the Article 32 exemption for UCITS and non-UCITS retail funds from the requirement to prepare a KID, is extended until the issues with the PRIIPs Regulation have been resolved. We consider this to be in the best interests of investors (given the potential for misleading disclosures) and the industry (from an implementation costs perspective- as these funds will effectively have to implement the regime twice).

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