André Van Varenberg – Tel Aviv , 6 November 2016 MDRT Latest EU texts on financial services: their impact on the distribution of life, investments and saving products André Van Varenberg – Tel Aviv , 6 November 2016 Chairman of the Brokers’ Committee

European Federation of Insurance and Financial Intermediaries Established in Paris in 1937 Headquartered in Brussels since 1989 53 member associations in 32 countries European Federation of Insurance and Financial Intermediaries Represents the interests of intermediaries with European institutions Single voice of the profession at EU level Member of WFII (World Federation of Insurance Intermediaries)

IDD MIFID II PRIIPS SCOPE

Scope IDD : Applies to distribution of non-life, life and insurance-based investment products (IBIPs ) products MIFID II: Applies to investment firms (and market operators, data reporting services providers, and third-country firms) providing investment services or performing investment activities through the establishment of a branch in the Union (ex of investment services and activities: investment advice). PRIIPs: introduces a standardised, Key Information Document (KID)” for packaged retail investment products, insurance-based investment products and packaged retail and insurance based investment products.

IDD MIFID II PRIIPS Main Changes

IDD – MIFID II – PRIIPS : more TRANSPARENCY , more FORMALISATION Insurance and financial intermediaries will have to become more transparent. Conflicts of interests, training, products governance in general will have to be more formalised.

PRIIPs Introduces a key information document (KID) of max 3 pages for packaged retail and insurance-based investment products

IDD MIFID II PRIIPS Conflict of interest management, remuneration, advice

IDD – MIFID II Conflicts of interest management, assessment of suitability and appropriateness IDD: To manage conflicts of interest by informing customers about intermediaries’ relationship with insurers but also by managing the remuneration policy of their employees so that this cannot conflict with their customers' interests. No arrangements by way of remuneration or sales target that could provide an incentive to recommend a particular product to a customer when they could offer a different product that would meet the customer’s needs better. In addition when you are distributing insurance-based investment products (IBIPs): to take all reasonable steps to prevent conflicts of interest from adversely affecting interests of customers. An appropriateness or suitability test also needs to be done. MIFID II: The model chosen for IBIPs in IDD regarding conflict of interest and suitability and appropriateness tests is largely based on the MiFID framework that already has these concepts, which are now being further developed at level 2.

IDD – MIFID II Remuneration Under IDD: Information to be provided by the intermediary to the customer in good time before the conclusion of the contract: The nature of the remuneration received in relation to the insurance contract and Whether it works on the basis of a fee, a commission , other type of remuneration or a combination of these types of remuneration Under MiIFD: firms have to provide information on the costs, including the cost of advice, how the client may pay for it, also encompassing any third-party payments.   In PRIIPs: the KID contains a reference to distribution costs stating that these are to be provided by the advisors, distributors or any other person advising on or selling the PRIIP.

IDD – MIFID II Ban of commission? IDD: No ban but EU Member States have however the option to limit or prohibit the acceptance or receipt of fees, commissions or other monetary or non-monetary benefits paid or provided to insurance distributors by any third party, or a person acting on behalf of a third party, in relation to the distribution of insurance products. MiFID: Ban for commissions in case of independent advice.

IDD MIFID II PRIIPS Proportional? Reasonable?

IDD MIFID II PRIIPS Much will depend upon realism of national implementation (and delegated acts) (Size of intermediaries, administrative burden?)

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