The AMF Board set up a working group to identify the key issues and find practical solutions for “bank” PEAs, which are popular with French retail investors. The main proposals to simplify plan transfer processes are to harmonise administrative requirements, reduce response times between institutions, use the standardised tax information form, limit the period during which retail investors’ arbitrages are not possible, and provide all retail investors with an information document explaining the various steps involved and any potential problems with their portfolios.
The report also recommends providing retail investors with an information document explaining the various stages and inform them of any steps to be taken, and inform heirs of a PEA holder of the tax and legal consequences of the holder’s death. The working group proposed a legislative amendment to the Monetary and Financial Code to make PSRs eligible for PEAs and authorise a right of rectification in the case of an execution error.
It also discussed other subjects without reaching a consensus, such as custody fees for worthless securities held by companies in court-ordered liquidation and the question of whether pure registered securities should be eligible for the PEA. The AMF Board commended the work done and decided to submit the report and its proposals for public consultation until 5 June.
According to the AMF, the main proposals are as follows:
- Harmonise the administrative requirements of PEA management institutions with respect to customers;
- Reduce response times between institutions in the case of incomplete files;
- Systematically use the standardised tax information form and Improve its automated and secure transmission;
- Limit the period during which the retail investors’ arbitrages are not possible starting from the time the tax form is issued, which is a condition for finalising the transfer.
Specific recommendations to improve client information:
- Provide all retail investors who wish to transfer their PEAs with an information document explaining the various steps involved and any potential problems with their portfolios (the working group has prepared a practical sheet for this purpose, which is appended to the report);
- Explicitly inform retail investors of any restrictions the host institution may have on eligible securities;
- Notify retail investors of the various stages and inform them of any steps to be taken;
- Inform retail investors of the specific complexity factors of their plan (pledges, unlisted securities, securities transactions, etc.);
- Inform heirs of a PEA holder of the tax and legal consequences of the holder’s death.
See the full announcement here: https://www.amf-france.org/en/news-publications/news-releases/equity-savings-plans-amf-working-group-proposes-avenues-improvement