Bund der Versicherten e.V.
BdV
Der Bund der Versicherten e.
ID: 547660218656-93
Lobbying Activity
Response to COM Delegated Regulation specifying the information referred to in art. 65.9 of the PEPP Regulation
17 Dec 2020
As Germany’s most important NGO of consumer protection related to private insurances (BUND DER VERSICHERTEN - German Association of Insured - based in Hamburg with about 45.000 members), we would like to thank the EC for the opportunity to publish comments on this consultation. Our organization is focused – by its statutes – on private insurances and on private pension products. We are registered in the EU Transparency Register (Identification number: 547660218656-93).
Our organisation is member of BETTER FINANCE, the European Federation of Investors and Financial Services Users, is the public interest non-governmental organisation advocating and defending the interests of European citizens as financial services users at the European level to lawmakers and the public (EU Transparency Register Identification number: 24633926420-79).
We fully approve this draft supplementing regulation on EIOPA's product intervention powers with regard to the future PEPP. We stress the crucial necessity that they are fully aligned with the already existing product intervention powers with regard to PRIIPs following to Commission Delegated Regulation (EU) 2016/1904 of 14 July 2016.
As EIOPA has clearly pointed out in its Technical Advice on PEPP intervention powers of 14 August 2020, it is "essential that product intervention powers are dynamic enough to enable EIOPA to deal with a range of different exceptional situations. Product intervention powers can be used, as a measure of last resort, where a significant PEPP saver protection concern, or a threat to the orderly functioning and integrity of financial markets or to the stability of the whole or part of the financial system of the Union has materialised. In addition, product intervention powers must also have a preventive function and allow steps to be taken to address issues before they become widespread."
We support EIOPA's view "that the factors and criteria set out in Article 65(9) are not exhaustive and that inclusion of other relevant and related factors should be considered, taking into account and building from experience related to product intervention powers in other areas, in particular under the PRIIPs Regulation. (...) The specific situation and circumstances of the PEPP provider or PEPP distributor, including the financial situation, solvency and business situation is relevant in determining the existence of a significant PEPP saver protection concern as it can be the root cause of practices and activities that can lead to detrimental consequences. The inclusion of these factors and criteria also reflects the existing interlinkages between conduct of business and prudential risks."
The factors may refer to the degree of complexity or innovation of a PEPP and its particular features, the type of PEPP savers to which the PEPP is marketed or sold and their financial sophistication. Therefore the transparency, understandability and comparability of the KID, the PBS and the terms and conditions of the PEPP are particularly important. The factors and criteria can be linked to product features pertaining to, for example, the proposed investments, the risk-mitigation techniques, the cost structures, the provided leverage, the corresponding governance structures, and the PEPP provider’s business model. In relation to the orderly functioning and integrity of financial markets, the factors may also refer to the size or the total amount of accumulated capital of the PEPP, the potential scale of detriment in the market and to the individual’s savings, possible contagion effect and where relevant, the detrimental effect on the price formation mechanism in the underlying market.
Therefore we conclude that this draft regulation of the product intervention powers with regard to PEPP products, savers, providers and distributors is pertinent, appropriate and proportionate and should not be "softened" in anyway.
We fully support Better Finance’s comment on this consultation (attached).
Read full responseResponse to COM Delegated Regulation specifying the information referred to in art. 40.9 of the PEPP Regulation
17 Dec 2020
As Germany’s most important NGO of consumer protection related to private insurances (BUND DER VERSICHERTEN - German Association of Insured - based in Hamburg with about 45.000 members), we would like to thank the EC for the opportunity to publish comments on this consultation. Our organization is focused – by its statutes – on private insurances and on private pension products. We are registered in the EU Transparency Register (Identification number: 547660218656-93).
Our organisation is member of BETTER FINANCE, the European Federation of Investors and Financial Services Users, is the public interest non-governmental organisation advocating and defending the interests of European citizens as financial services users at the European level to lawmakers and the public (EU Transparency Register Identification number: 24633926420-79).
We agree with this draft supplementing regulation. Nevertheless we stress some necessary specification on the goal of the information to be given following to draft article 1, as EIOPA has pointed out in its draft recital for the ITS on the format of supervisory reporting of 14 August 2020:
"An appropriate level of detail of the information is crucial for the implementation of a risk-based supervisory review process and product level supervision. (...) The framework ... should ... ensure consistent and efficient supervision by specifying the method, means, language and other details of exchange of information, including the scope and treatment of information to be exchanged. (...) Effective and efficient supervision requires that the exchange of information and the cooperation between competent authorities take into account the nature, scale and complexity of the product, the availability and type of information and the most recent and relevant data. In order to ensure efficient and timely cooperation and exchange of information, standardised procedures and forms should be established."
That is why we propose to strengthen as well the precision as the obligation of the information to be given by this wording (draft article 1):
The additional information referred to in Article 40(1) to (5) of Regulation (EU) 2019/1238 shall include the following OBLIGATORY AND COMPREHENSIVE INFORMATION AS MUCH STANDARDIZED AS POSSIBLE.
In our comment on EIOPA's draft ITS on supervisory reporting in June 2020 (included in the EIOPA OPSG Opinion), we had already stressed that these information requirements should be respected "promptly" and not just "in good time" by the product providers - a wording which had been adopted by EIOPA.
We fully support Better Finance’s comment on this consultation, which therefore we attach.
Read full responseResponse to DA on conduct of business rules for the distribution of insurance-based investment products
17 Aug 2017
We fully agree with the assessment of the Commission that insurance-based investment products are often sold as potential alternatives or substitutes to retail investment products.
We clearly reject that the reference to monetary benefits (such as inducements) has been removed from the list of minimum criteria to assess whether a conflict of interest arises (comparison of Draft DA, Article 3 (2) with EIOPA’s TA of 1 February 2017, p. 37, no. 2c which has been removed completely as well as TA, p. 38, no. 7). The reasons given for these omissions are not convincing at all. Even if there are differences in the treatment of inducements in IDD and MiFID II, these differences do not legitimate the total omission of this criteria from the list. In a huge national insurance market like in Germany, where commissions are still the main basis for distribution activities, the omission of this criteria will have the consequences that distribution practices will not change at all and mis-selling cases will continue. We have outlined these mis-selling practices in our comments on EIOPA’s IDD consultations in 2015 and 2016.
In addition, the non-exhaustive list of criteria to assess the detrimental impact of inducements has been revised now conceding a broad discretion to market participants (comparison of Draft DA, Article 8 (2) with EIOPA’s Technical Advice of 1 February 2017, p. 48, no. 5). In letter c) of this subparagraph EIOPA's proposal explicitly stresses the "disproportionate" value of inducement when considered against the value of the product and the services as a crucial criteria for this list, but the Draft DA omits this meaningful adjective what implies a strong softening of this criteria.
EIOPA clearly emphasizes that this list of criteria for assessing detrimental impact on the quality of service to the customer is “non-exhaustive” (TA, p. 48, no. 6), but Draft DA simply omits this provision (cf. Article 8 (2)). Consequently new possible detrimental impacts and ongoing clarifying examples will be excluded from this delegated act and possible future guidelines if adopted in this version. That is the reason why we urgently ask the EC to include EIOPA’s original proposals in the Draft DA.
There is another deviation related to the criteria of non-complex insurance-based investment products (comparison of EC Draft DA, Article 16 (a) with EIOPA's TA, page 77, letter (a)): the criteria of guaranteed minimum surrender value for the classification as non-complex IBIP has been excluded (only guaranteed minimum maturity value is maintained), although “legitimate costs” could be deduced in EIOPA’s proposal for both minimum values.
However, the deliberate exclusion of guaranteed minimum surrender value makes it obviously much easier for insurers to classify an IBIP as non-complex, because there are a lot of IBIPs which concede a guarantee of return of gross premiums only if maturity is reached. But this guarantee does not prevent from poor advice and mis-selling practices, and therefore massive customer detriment will occur in the case of early withdrawal. That is why the guaranteed minimum surrender value is unconditionally necessary.
Consequently we urge the Commission either to include the guaranteed minimum surrender value as necessary criteria for non-complex insurance-based products, or paragraph (a) of Article 16 as well as recital 13 should entirely be omitted from the Draft DA. An IBIP contract including only a guaranteed minimum maturity value is definitely mis-leading for customers, because of poor advice many contracts do not reach maturity. We acknowledge that letter e of Article 8 (2) of this Draft DA should prevent from this kind of consumer detriment, but still there is no evidence that this provision is actually effective.
We are strongly concerned that these changes do not only lower the level of consumer protection, but will also hinder a convergent application by market participants.
Read full responseResponse to DA on product oversight and governance requirements for insurance undertakings and insurance distributors
17 Aug 2017
As Germany’s most important NGO of consumer protection related to private insurances (with more than 50.000 members) we would like to thank the European Commission for the opportunity to give a feedback for this draft.
We would like to stress our strong support that this draft DA establishes the core obligations for insurance manufacturers and insurance distributors with regard to the product approval process, to target markets, to product testing, monitoring and review and to information obligations between manufacturers and distributors. These are crucial innovations for the enhancement of the protection of consumers and retail investors on the insurance markets.
But there is one indispensable issue where this draft is even contradictory to the main objective of prevention from consumer detriment (comparison of EC Draft DA on POG, Article 5 (2) with EIOPA’s Technical Advice (1 February 2017), p. 28, no. 15): Following to EIOPA, the manufacturers “shall” identify groups of customers for whom the product is generally not compatible, but the EC Draft DA only stipulates that manufacturers “may” identify groups of customers for whose needs, characteristics and objectives the insurance product is generally not compatible.
The consequence of this amendment is that the obligation to identify a negative target market has been replaced by the right to identify a negative target market if the manufacturers consider this appropriate. We consider this amendment as a severe step backward facilitating possible consumer detriment. That is the reason why we urgently ask the EC to adopt the wording of EIOPA’s original proposal in the Draft DA.
If this amendment is not remedied, we are strongly concerned that these changes not only lower the level of consumer protection, but will also hinder a convergent application by market participants.
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