Product information sheet (financial advice)

The product information sheet (also called consumer protection information or package insert ) is intended to provide investors with a clear overview of the main opportunities and risks associated with banking products. It should thus enable the consumer to quickly grasp the essential properties of the financial product and to compare different investment products more easily.

In the case of investment funds , the product information sheet is referred to as “Key Investor Information” (WAI) or “Key Investor Information Document” ( KIID or KID for short). The KIID replaces the simplified sales prospectus .

background

Since the outbreak of the financial crisis , in which many private investors suffered, in some cases considerable losses, the advisory practice of banks has been increasingly criticized in public. The sale of certificates and other complex structured products is particularly controversial in this context , as many customers claim to have suffered high losses due to the collapse of Lehman Brothers, ignorant of the associated issuer risk .

On July 1, 2011, an essential part of the law to "Strengthen investor protection and improve the functionality of the capital market" (AnSFuG) came into force. In this, the legislature requires a document in which the essential information about a financial instrument is presented in a "clear and easily understandable manner".

Passing on the KIID is already binding for German investment funds. European funds can still benefit from a special regulation. You still have a deadline of 30 June 2012 at the latest for the implementation. Until then, a PIB in conjunction with a simplified sales prospectus may be issued as a replacement.

history

Advance by the Ministry of Consumer Protection

In July 2009, Consumer Protection Minister Ilse Aigner asked the financial sector for the first time to develop standardized information sheets for the products on offer on a voluntary basis. To this end, the ministry published a corresponding template that clearly shows the main opportunities, risks, costs and basic information of a financial product. The sheet is divided into 10 categories:

1. Product name
2. Product Type
3. Provider or issuer
4. Product description
5. Risks (exchange rate / business risk, issuer / credit risk, foreign currency risk)
6. Yield (current income, price gains)
7. Costs (on acquisition, inventory, sale or termination)
8. Availability
9. taxation

Financial industry response

The banks initially reacted extremely cautiously and cautiously to the ministry's proposal. Only the direct bank ING-DiBa was the first German bank to introduce product information sheets for its savings products as well as the investment funds, bonds and certificates that are actively offered in mid-September 2009.

• On February 11, 2010, Deutsche Bank followed as the first branch bank and introduced product information sheets, which will henceforth be used in customer service.
• On February 17, 2010, MLP, the first financial sales organization, presented its product information sheets for two products.
• On February 26, 2010, the Association of German Banks presented a sample product information sheet that takes into account the considerations of the Ministry of Consumer Protection as well as the requirements of the EU Commission.
• On March 8, 2010, the Federal Association of German Volksbanks and Raiffeisenbanks (BVR), the German Savings Banks and Giro Association (DSGV) and the Federal Association of Public Banks in Germany (VÖB) presented a joint product information sheet. In the course of the presentation, the three associations made the private banks an offer "to join this market standard".
• On March 16, 2010, the German Derivatives Association (DDV) presented its own sample product information sheet for certificates and at the same time requested a standardized product information sheet for all German financial associations.
• On April 1, 2010, the independent institute for financial services presented the draft of a product information sheet that uses traffic lights to highlight the suitability of financial products for various investment goals.
• On April 13, 2010, Targobank announced that it was now also using its own product information sheet for investment funds and savings.

Public reaction

In June 2010, the Federation of German Consumer Organizations (vzbv) presented a study that examined a sample (12 information sheets from eight providers). The bottom line:

• Comparability and clarity of financial products cannot be achieved with voluntary solutions.
• The product information is usually mixed up with information that is promotional.
• Positive information is often presented broadly, while negative information (e.g. risks and costs) tends to be shorter and is mentioned last.
• The information is often not understandable, especially with more complex products.
• Different terms are used for the same information.
• A comparison of the products is still not possible.

Based on the results of the study, vzbv board member Gerd Billen demanded : "It is high time for clear legal standards."

Information obligation since July 1, 2011

Since July 1, 2011, product information sheets have been mandatory for investment advice on buying securities. In this context, banks and other financial services institutions must provide the consumer with a short, easily understandable and advertising-free product information sheet that must not exceed two - in exceptional cases not more than three - A4 pages and contain the following information:

• the type of investment product,
• how it works,
• the associated risks,
• the prospects for capital repayment and income under various market conditions as well
• the costs associated with the investment.

See also

• Advisory protocol (investment advice)

Individual evidence

1. ↑ BMELV press release: Aigner presents product information sheet for better financial advice ( memento of the original from August 19, 2014 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. 
2. ↑ ING-DiBa introduces “package insert” for investment products - direct bank implements the consumer protection minister’s demand  ( page no longer available , search in web archives )  Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice.  
3. ↑ Deutsche Bank creates more transparency in investment advice with a new product information sheet ( Memento of the original dated February 17, 2010 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. 
4. ↑ MLP introduces new product information sheets
5. ↑ Banking Association presents a new information sheet for financial products ( Memento of the original from March 1, 2010 in the Internet Archive ) Info: The archive link has been inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. 
6. ↑ Savings banks, cooperative banks and public banks standardize product information
7. ↑ DDV: "A little more product transparency" (PDF; 299 kB)
8. ↑ Press release from the Institute for Financial Services
9. ↑ Targobank press release on the product information sheet ( Memento of the original from December 18, 2015 in the Internet Archive ) Info: The archive link has been inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. 
10. ↑ PDF, 13 pages, June 14, 2010
11. ↑ vzbv.de press release June 14, 2010  ( page no longer available , search in web archives )  Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice.  
12. ↑ Aigner: More consumer protection through "package insert" - the product information sheet is mandatory for banks from July 1st. (No longer available online.) Federal Ministry of Food and Agriculture , June 28, 2011, archived from the original on September 23, 2015 ; accessed on August 16, 2014 (press release). Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.