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ESAs' proposals for ES disclosure templates would not improve transparency for consumers

Insurance Europe has today published its response to a survey by the European Supervisory Authorities (ESAs) on their proposals for disclosure templates for environmental and/or social financial products.

Europe’s insurers support the goal of improving the participation of consumers in the green transition by ensuring that they receive clear and understandable information on environmental and/or social financial products. Disclosures must be designed to be of the maximum value for consumers and developed with the end-user experience in mind.

Unfortunately, the ESAs’ proposed templates are neither consumer-friendly nor digital friendly. In particular, the templates are difficult to understand, too long and risk duplicating information contained in other documentation that is already provided to consumers. This will result in unnecessary information overload and will undermine consumer understanding.

In addition, the prescriptiveness of the templates does not allow manufacturers to adapt the information to different product features and existing national practices. This will result in poor comparability between single product types, and even worse comparability across multiple product types.

For these reasons, Insurance Europe recommends that the ESAs:

  • Focus on disclosure content that is really meaningful to consumers rather than on the format and presentation of the disclosures – Should the ESAs pursue the introduction of templates, their use should be optional so that financial market participants are able to deliver clear and reliable information to consumers accordingly.
  • Make use of a more comprehensive testing of end-users’ needs and preferences before proposing new customers’ disclosures – More consideration should be given to consumers’ real needs and to the quantity of documents that they already receive based on other legislation, including national provisions.
  • Provide clarity on how to address the current implementation challenges – The ESAs will not finalise their proposals for templates, as well as the overall Sustainable Finance Disclosure Regulation (SFDR) Level 2 provisions, before the end of January 2021, little over a month before the current deadline for implementation of the SFDR. Clarity on how to address these implementation challenges in terms of deadlines and contents of the new measures for sustainability-related products is urgently needed.

Overall, it is key that the disclosure framework reflects market reality, is workable across product types and delivers clear and understandable sustainability-related information to customers. This is equally important at product as well as at entity-level.

Published 20 October 2020