The Joint Association Committee (JAC) - a representative of the European Securitisation Forum, International Swaps and Derivatives Association, Association for Financial Markets in Europe and Securities Industry and Financial Markets Association - has published its response to the European Commission's Packaged Retail Investment Products (Prips) proposal, requesting an alteration to both the EC's approach to the Key Information Document (Kid) and its suggested rules regarding fees.

The response, dated November 17, follows a workshop on Prips held by the EC in Brussels in October, which led to a request from the Commission that the Kid should be created by product providers. "We do not see why distributors should not be permitted to compile client-specific Kids and, as a result of this, we do not see why distributors should not be permitted to prepare Kids for all products which they wish to distribute," states the JAC. "[A] rule which required all Kids to be prepared by product providers would effectively prohibit such customisation... liability for the Kid should rest with the person who prepared it - a rule that product providers always had liability for Kids would, again, effectively prohibit the preparation of Kids by anyone other than providers and in consequence operate as a ban on personalised Kids."

More broadly, and in recognition of the liability that distributors have assumed in Singapore and Switzerland when faced with problems over products provided by Lehman Brothers, the JAC says: "We believe that it should be open to the product distributors and product providers to agree between themselves who should prepare the Kid and where liability for that Kid should lie. Provided that the result of this agreement is made very clear to the investor, there is no reason why the investor should not be bound by this."

If an investor has been made aware that a particular Kid is prepared solely by the product provider, he should only be entitled to remedies against the product provider, and vice versa, says the JAC.

On the subject of fees, the JAC suggests that contractual Prips - as opposed to collective investment Prips, which offer a service for a fee that is usually fixed - should not be subject to the fee-disclosure regime. The JAC's letter argues that: "A contractual Prip... will pay the defined return - fees and costs are already taken into account in the calculation of the return that is defined. The issue for the investor is as to whether the price which he is being charged for that return is cheap or dear, and he... can establish this by looking across the range of competing products and structures. A useful comparison can be made with bank deposits."

The proposed rule on fees has placed structured products in the same pot as managed funds says Timothy Hailes, associate general counsel at JP Morgan and chairman of the JAC, speaking at the Structured Products Europe conference in London on November 19.

The JAC letter continues: "it is incorrect to regard a contractual Prip as a species of managed fund... disclosure of profit margins or losses on hedging is irrelevant to contractual Prips... This is a manifestation of the fact that it makes little sense to speak of comparing profitability even between different Prips."