The Order ECC/2316/2015, regarding the duty of information and classification of financial products, published in the Spanish Official Gazette on 5 November 2015, will come into force on 5 February 2016.
This Order establishes a standardised information system and classification of financial products aimed at warning the clients about the risk level and complexity of such products. For these purposes, each product will have to include different indicators (in different colours) and logos (for example, exclamation marks and padlocks) depending on the risk level, complexity and liquidity of the specific product.
This new regulation shall apply to life-savings guaranteed insurance products, pension plans (either individual or collective), bank deposits and the financial products listed under section 2.1 of the Spanish Act on the Stock Market (approved by Royal Legislative Decree 4/2015, of 23 October).
Nevertheless, unit-linked products (where the policyholder assumes the risk of the investment) do not fall under the scope of Order ECC/2316/2015 (although the draft version of the Order did expressly envisage its application to unit-linked). The information requirements concerning unit-linked products will be regulated under the PRIIP’s regulation coming into force in 2017.
In our opinion, it would have been more advisable to wait for PRIIP regulation to come into force before passing the Order ECC/2316/2015 so as to avoid inconsistencies between both regulations.
In addition, it must be highlighted that some financial products, such as investment funds, shall also comply with certain duties of information and risk indicators regulated under Circular 2/2013 issued by the Spanish Securities & Exchange Commission (”CNMV”). This Circular will, consequently, be applicable to pension plans (which, as mentioned, are also subject to the new Order ECC/2316/2015).
To sum up, the financial products will be subject to three different risk indicators regulated under three different regulatory frameworks (Order ECC/2316/2015, Circular 2/2013 and the Spanish future regulation on PRIIPs). Obviously, this does not help to achieve a standardised and homogeneous information system. It may be more confusing than useful for a customer who is considering the purchase of a financial product to see three different information systems.