While the rapidly approaching commencement date of the General Data Protection Regulation (GDPR) proves to be the Leviathan piece of regulation for many companies in 2018, the eventual implementation of Packaged Retail and Insurance-Based Investment Products (PRIIPs) appears to already be proving a challenge for financial services firms, sitting across both regulatory matters and how a company engages with its customers.
PRIIPs imposes new pre-contractual disclosure requirements for the benefit of retail investors when they are considering the purchase of “packaged” retail investment products or insurance based products, excluding Undertakings for Collective Investment in Transferable Securities (UCITS), which have been exempted until 2020. In layman’s terms, this new directive means that firms who sell financial packages will have to ensure that the customer is clear on what it is exactly they are purchasing. The intention is to give as much information and clarity to the customer as possible.
These standardised Key Information Documents, known as KIDs, convey a checklist of information in 3 pages or less, outlining to customers the risks associated with products is an opportunity for firms to showcase their products.
For complex products, this no doubt poses a challenge for businesses, however there remains a distinct opportunity to connect with customers in unexpected and relevant ways. An informed customer making an educated decision about your product should be viewed as a positive in helping you establish an engaged, meaningful long-term relationship with your customer base.
Much like GDPR demanding that consumers be fully informed how their data will be used, PRIIPs regulation is a drive to empower the consumer and encourage financial inclusion, that, if communicated correctly, can serve to differentiate your company from competitors and build the vital pillar of trust with consumers. Looking beyond ‘burdensome compliance’, regulatory shifts of any kind should prompt companies to consider how and if such change should be reflected in their corporate identity and ethos – whether it be through ongoing communications activities or new CSR programmes on financial literacy.
Here at Hanover we have a fundamental belief that perceived threats, or challenges, should be seen as opportunities. Using otherwise burdensome regulations to effect positive change and re-position yourself as a ‘best in class’ is a smart way to use the energy and intellectual bandwidth that will be expended in implementing new rules and regulations. Moreover, these challenges should also be seen as an opportunity to turn transactional business relations with customers and clients into more meaningful, and therefore valuable, relationships.