LONDON (Reuters) - Britain's asset management trade body on Tuesday called for urgent action to fix "failings" in the design of European Union rules governing how retail investment funds are marketed.
The EU's Packaged Retail Insurance-based Investment Products (PRIIPs) regulation contained "flaws" including around how funds needed to describe trading costs, the Investment Association said, mirroring complaints from its European peer.
Initially applied to funds including investment trusts after going live in January, the rules are eventually set to be expanded to include other funds.
In July, Britain's markets regulator, the Financial Conduct Authority, raised its own concerns and launched an investigation into the impact of PRIIPs, seeking comment from industry participants.
In response, the IA said while PRIIPs set out to help investors by providing greater transparency and comparability across funds, the need to provide fund performance scenarios and cost calculations was "potentially highly misleading".
As a result, the IA said it wanted the FCA to immediately suspend and replace those flawed calculation methodologies currently being used and delay the extension of PRIIPs until a better solution is found.
"Urgent action is now needed by the FCA to address the flawed methodologies of PRIIPs which are having harmful consequences for savers and investors," Chris Cummings, Chief Executive of the Investment Association, said.
"The FCA rightly called for evidence of investor detriment caused by the new rules. It has been delivered. The case is now proven and it's time for action."
Cummings said the IA had offered pragmatic solutions to the FCA and wanted to work with it and other regulators to find a solution that delivered "crystal clear cost transparency".
It is unclear, however, if the FCA would be willing to unilaterally change how an EU rule is applied without formal endorsement from Brussels, particularly as Britain's future trading relations with the bloc after Brexit next March have yet to be determined.
(Reporting by Simon Jessop and Huw Jones; editing by David Evans)