Following the European Parliament's rejection of the PRIIPs KID regulatory technical standards (RTS) last week, Tim Mortimer, managing director at Future Value Consultants, asks whether the 31 December implementation date can possibly remain unchanged.
Enforcement action
This brings us onto the next consideration that, as with any other regulation, non-compliance has risks of enforcement action. However, both Green and Widegren agreed that such action would be "extremely unlikely", as long as firms had done something broadly reasonable under the circumstances.
However, the threat of investor action is harder to discount, as is generally the case when considering how to protect against civil compensation claims.
While Green said it is hard to see how a firm could be held to be in breach of regulations that were not fully defined, he said this is always a possibility. The danger is that success in any relevant court cases would set a precedent that might be hard to overturn, certainly in the particular country that it happens in.
Even if this whole nightmare scenario does come to pass, fully defined RTS will eventually come into place. However, the long-lasting impact and credibility damage to this regulation will, I believe, be significant.
How can such an important piece of regulation recover from a chaotic opening year?
I would advise any affected firm to consider their position as long as this scenario remains possible. For anyone that still refuses to believe it can happen do not forget that it is currently the status quo outcome - if neither the EP nor EC move in the next three months it will happen.
We should all hope that the EC accepts the mistakes that have happened, implements a six month delay of implementation to July 2017 in no longer than the next six weeks, and fast track RTS changes that get Parliamentary approval by February 2017 at the very latest.
This, I believe, is the best compromise for all concerned. We cannot have Level 1 going it alone.
Tim Mortimer is managing director at Future Value Consultants
