LONDON (Reuters) - European Union lawmakers are expected to allow more time to amend rules governing the retailing of financial products worth 10 trillion euros (8.45 trillion pound) rather than reject them outright next week and potentially delay their January introduction, a senior lawmaker said on Friday.
The rules force insurers, banks and financial advisers to use a standard “key information document” or KID to give comparability for consumers across what are often national markets dominated by mutual funds.
A KID document must accompany each product and be no more than three sides long and use jargon-free language to show potential future performance of the product and total costs.
It replaces a patchwork of documents given to customers for financial products including life insurance, mutual funds and other instruments.
A panel of lawmakers from the European Parliament has recommended that the full parliament meeting next Wednesday should reject the rules, saying they would mislead investors.
The “adverse” scenario for indicating the potential performance of a product was too optimistic, the panel said.
Ahead of the vote, lawmakers have made progress in persuading the EU’s executive European Commission to amend the rules, Green Party member Sven Giegold said.
The European Commission has proposed an additional product performance scenario that takes a more conservative approach, coupled with a warning, he said.
“That is reasonable and would technically solve the problem,” Giegold said.
The most likely outcome for next Wednesday’s vote in full parliament is to allow a further three months to iron out remaining concerns among lawmakers, Giegold said.
Lawmakers want the changes made to the actual rules rather than reflected in guidance from regulators.
Once a deal is done, parliament can fast-track approval to help keep the rules on track for January, Giegold said.
The clash between lawmakers and European Commission is being closely watched as introducing the KID is a major challenge for firms, some of which have already called for a delay to give them more time to prepare.
($1 = 0.8917 euros)
Reporting by Huw Jones; Editing by Hugh Lawson