Those familiar with the ongoing saga of PRIIPs will be aware that the presentation of performance has been an ongoing political hot potato. The European Commission is again under fire for the latest iteration in a long series of proposals on the subject.
The goal is to develop a harmonised disclosure that gives investors an indication of how a product might perform in the future in order to facilitate comparisons. Unfortunately, predicting the future is exactly as difficult as it sounds.
The solution that stakeholders wanted - for manufacturers to state the real life, historic performance of their products - has been effectively off the table ever since the political "trilogue" for the (Level 1) framework legislation discounted the prospect.
The solution that stakeholders got was a prediction of potential future performance scenarios using calculations based on historical performance.
This approach was devised by the supervisory agencies for insurance, banking and securities and markets and was heavily criticised for its potential to mislead investors by overstating potential gains. Nevertheless, it was adopted by the Commission in an effort to preserve their aggressive implementation time frame.
The approach was then effectively vetoed by the European Parliament giving rise to the delay of the PRIIPs regime. It now seems that the Commission's remodelling is just as unpopular as its forebears and the supervisory agencies are the latest EU institutions to lock horns with the Commission. Their pre-Christmas letter states that "the amendments to the performance scenarios proposed by the Commission raised comprehension issues and may be misleading".
It seems that the path to harmonisation is anything but harmonious.