Changes from report parliamentary committee draft to plenary report

Added(a) that the insurance-based investment product’s costs and charges are compatible with the objectives, needs and characteristics of the target market;

Added(b) Where insurance undertakings and intermediaries manufacture or distribute insurance-based investment products falling under the definition of packaged retail investment products in Article 4, point (1), of Regulation (EU) No 1286/2014, they shall perform a peer grouping analysis in accordance with this paragraph. In their assessment, distributers may rely on the manufacturer’s peer grouping analysis.

AddedThe manufacturer and distributor of an insurance-based investment product falling under the definition of packaged retail investment products in accordance with Article 4(1) of Regulation (EU) No 1286/2014, shall perform a peer grouping evaluation of the insurance product.

AddedInsurance undertakings and intermediaries which manufacture insurance-based investment products shall, in addition, perform a peer analysis of historical performance when performing product review of existing insurance products falling under the definition of packaged retail investment products in accordance with Article 4(1) of Regulation (EU) No 1286/2014.

AddedInsurance undertakings and intermediaries which distribute insurance-based investment products shall, in addition, perform a peer-analysis of service costs based on an internal analysis of relevant peers in the market.

AddedThe peer grouping evaluation shall be performed on the basis of a peer group defined by the insurance undertakings and intermediaries. Insurance undertakings and intermediaries shall substantiate and document the choice and definition of the peer group. If the product falls under the definition of a UCITS in Article 1(2) of Directive 2009/65/EC of the European Parliament and of the Council, or of an AIF in Article 4(1), point (a), of Directive 2011/61/EU of the European Parliament and of the Council, the peer group may be based on the relevant European fund classification system in accordance with Article 14(1f) of Directive 2009/65/EC of the European Parliament and of the Council or Article 12(1f) of Directive 2011/61/EU of the European Parliament and of the Council.

AddedEIOPA shall by ... [12 months after the entry into force of this amending Directive], develop guidelines on the process and criteria used by investment firms to carry out their peer grouping evaluation, and shall periodically update those guidelines.

Added7. An insurance undertaking or insurance intermediary ▌which manufactures or distributes insurance-based investment products shall document all assessments made and shall, upon request, provide such assessments to a relevant competent authority, including the the justification and demonstration of the proportionality of costs and charges of the insurance-based investment product:

AddedIn accordance with the information to be disclosed under Article 29 of this Directive, an insurance undertaking or intermediary which manufactures or distributes an insurance-based investment product falling under the definition of packaged retail investment products in accordance with Article 4(1) of Regulation (EU) No 1286/2014, shall report to the competent authorities details of costs and charges of the insurance-based investment product destined for retail investors, including, where relevant, distribution costs incorporated in the costs of the insurance-based investment product and costs related to the distribution of advice. The competent authorities shall transmit such data without undue delay to EIOPA.

AddedEIOPA, after having consulted ESMA and the competent authorities and after industry testing, shall develop draft regulatory technical standards for the application of the requirements in this paragraph to determine the following:

Added(a) in accordance with the information to be disclosed under Article 29, the content and type of data to be reported to the home authorities, based on existing disclosure and reporting obligations;

Added(b) the formats, frequency and starting date for the information to be reported, in accordance with the information to be disclosed under Article 29.

AddedEIOPA shall submit those draft regulatory technical standards to the Commission by [18 months after date of entry into force of this Directive].

AddedPower is delegated to the Commission supplement this Directive by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

Added7a. An insurance undertaking which manufactures and offers or recommends an insurance-based investment product may establish one pricing process relating to both manufacturing and distribution stages.

Added▌

Added9. EIOPA shall by ... [12 months after the entry into force of the amending Directive], develop guidelines to specify criteria to determine whether costs and charges are justified and proportionate, and it shall periodically update those guidelines.

Added▌

Added11. The policies, processes and arrangements referred to in this Article shall be without prejudice to all other requirements under this Directive including those relating to disclosure, suitability or appropriateness, identification and management of conflicts of interest, and third-party payments.

Added12. This Article shall not apply to insurance products which consist of the insurance of large risks.’;

Added13. By ... [five years after the date of application of this amending Directive], Member States shall communicate to the Commission and ESMA all relevant information concerning the implementation of this Article. The Commission and ESMA may request additional information from national competent authorities.

AddedOn the basis of the information provided by Member States, the Commission, in consultation with ESMA and EIOPA, shall carry out an evaluation of the effective implementation of this Article and assess in particular:

Added(a) whether the effects of strengthened product governance requirements set out in this article have led to better value for money for citizens;

Added(b) the impact of the relevant provisions of this Directive on potential conflicts of interest associated with inducements, the evolution of costs, the overall level of retail investment in capital markets, consumer protection and the relevance of distribution rules;

Added(c) the implementation of financial literacy measures.

AddedIf the evaluation carried out by the Commission proves that the implementation of the new product governance requirements set out in this Article provides no positive change for consumers, the Commission shall accompany its report by a legislative proposal amending this Directive, if appropriate.’;

Added(17) Article 26 is replaced by the following:

Added'Article 26

AddedScope of additional requirements

AddedThis Chapter establishes requirements additional to those applicable to insurance distribution, where the insurance distribution is carried out in relation to the sale of insurance-based investment products.

AddedInsurance-based investment products may only be distributed by:

Added(a) an insurance intermediary;

Added(b) an insurance undertaking.’;

Added(18) the following Article 26a is inserted:

Added‘Article 26a

AddedMarketing communications and practices

Added1. By derogation from Article 17(2), Member States shall ensure that marketing communications of insurance-based investment products are clearly identifiable as such and clearly identify the insurance intermediary or insurance undertaking responsible for their content and distribution, regardless of whether the communication is made directly or indirectly by the insurance intermediary or insurance undertaking.

Added2. Member States shall ensure that marketing communications of insurance-based investment products are developed, designed and provided in a manner that is fair, clear, not misleading, balanced in terms of presentation of benefits and risks, and appropriate in terms of content and distribution channels for the target audience and where related to a specific insurance-based investment product to the target market identified pursuant to Article 25(1).

AddedAll marketing communications of insurance-based investment products shall present, in a prominent and concise way, the essential characteristics of the insurance-based investment products to which they refer.

AddedThe information shall be made accessible, depending on the characteristics of the medium, via a nested display, scroll over, through a QR-code, or similar.

AddedThe presentation of the essential characteristics of marketing communications of insurance-based investment products shall ensure that retail investors can easily understand the key features of the insurance-based investment product as well as the main risks associated with them.

Added3. Member States shall ensure that marketing practices are developed and used in a manner that is fair and not misleading, and shall be appropriate for the target audience. Member States shall ensure that insurance undertakings and insurance intermediaries, carrying out profiling of individuals for the purpose of this paragraph, fully comply with Regulation (EU) 2016/679.

Added4. Where a manufacturer of an insurance-based investment product prepares and provides a marketing communication to be used by a distributor, the manufacturer shall be responsible for the content of such marketing communication and its update. The distributor shall be responsible for the use of this marketing communication and shall ensure that it is used for the identified target market only and in line with the distribution strategy identified for the target market.

AddedWhere an insurance undertaking or an insurance intermediary that offers or recommends insurance-based investment products which it does not manufacture, organises its own marketing communication, it shall be fully responsible for its appropriate content, update and use, in line with the identified target market.

Added4a. Where an insurance undertaking or insurance intermediary uses the services of a finfluencer, the insurance undertaking or insurance intermediary shall:

Added(a) establish a written agreement with the finfluencer determining the nature and scope of the activity to be carried out on behalf of the insurance undertaking or insurance intermediary;

Added(b) upon request, provide the identity and contact details of all finfluencers on whose services it relies to the competent authority;

Added(c) regularly verify whether the activity of the finfluencers whose services it relies on complies with paragraphs 1 to 4.

Added5. Member States shall ensure that insurance undertakings and insurance intermediaries make annual reports to their management body on the use of marketing communications and strategies aimed at marketing practices, the compliance with relevant obligations on marketing communications and practices under this Directive and on any signalled irregularities and proposed solutions.

Added6. Member States shall ensure that national competent authorities can take timely and effective action in relation to any marketing communication disseminated on their territory or marketing practice taking place on their territory that do not comply with the requirements laid down in paragraphs 1 to 3.

Added7. Member States shall ensure that insurance undertakings and insurance intermediaries keep records of all their marketing communications of insurance-based investment products provided or made accessible to retail customers or potential retail customers, or their marketing communications provided or made accessible to retail customers or potential retail customers that is made by any third party remunerated or incentivised through non-monetary compensation.

AddedSuch records shall be retained for at least the duration of the relationship between the insurance undertaking or insurance intermediary and the customer. Where the duration of the contract is more than seven years, only records of essential information shall be kept.

AddedThose records shall be retrievable by the insurance undertaking or insurance distributor upon request by the competent authority.

AddedThe records referred to in the first subparagraph shall contain all of the following:

Added(a) the content of the marketing communication;

Added(b) details about the medium used for the marketing communication;

Added(c) the date and duration of the marketing communication, including relevant starting and end times;

Added(d) the targeted customer segments or profiling determinants;

Added(e) the Member States where the marketing communication was made available;

Added(f) the identity of any third party involved in the dissemination of the marketing communication.