On 19 January 2018, EIOPA published the translations of the Guidelines under the Insurance Distribution Directive on insurance-based investment products (IBIPs) that incorporate a structure which makes it difficult for the customer to understand the risks involved into all official languages of the European Union indicating the start of a “comply or explain” reporting process. During a 2-month period competent authorities to which the Guidelines apply need to confirm whether they comply or intend to comply with the Guidelines.
The Guidelines aim to minimise the risks of consumer detriment arising from mis-selling of IBIPs and are developed in line with Articles 30(7) and (8) of the Insurance Distribution Directive (IDD). The Guidelines include criteria to identify product features difficult for the customer to understand. They intend to set a suitable framework to allow for “execution-only” sales of products, where an assessment of the suitability or appropriateness of an IBIP for the customer does not need to be carried out by the insurance intermediary or undertaking as part of the sales process.