key information documents (KIDs)

European Commission Guidelines on Application of PRIIPS Regulation

 

On July 4, 2017, the European Commission adopted a communication containing guidelines on the application of the Regulation on key information documents (“KIDs“) for packaged retail and insurance-based products (“PRIIPS“) (Regulation 1286/2014) (PRIIPS Regulation).

The PRIIPS Regulation lays down rules on the content and format of the KID to be drawn up by PRIIP manufacturers and on the provision of the KID to retail investors and those selling or advising on the products. By smoothing out potential interpretative divergences throughout the EU, the guidelines hope to help providers and distributors of investment products, funds and investment insurance policies design their KIDS. Along with several others, the guidelines address the following issues:

  1. products covered by the PRIIPS Regulation;
  2. products made available to retail investors against no consideration;
  3. multi-option PRIIPS;
  4. insurance-based investment products with PRIIPS and non-PRIIPS as underlying investment options;
  5. territorial application;
  6. use of KIDs by UCITS;
  7. PRIIPS only sold by intermediaries;
  8. distribution of a PRIIP without a KID; and
  9. a non-PRIIP product offered alongside a PRIIP.

The communication was published in the Official Journal of the EU (OJ) on July 7, 2017, as 2017/C 218/02. Firms must comply with the Regulation from January 1, 2018.

Council of EU Postpones PRIIPS Regulation by One Year

 

On December 8, 2016, the Council of the EU announced that it has adopted a Regulation postponing the application date of the Regulation on key information documents (KIDs) for packaged retail and insurance‑based investment products (“PRIIPs“). (Regulation 1286/2014) (PRIIPs Regulation).

The PRIIPs Regulation will now apply from January 1, 2018 rather than December 31, 2016.

In the Council’s press release on December 8, 2016, the Council explained that the delay will enable regulatory technical standards (RTS) to be defined, leaving enough time for the industry to adapt to the new rules.

The Council published a document (PE-CONS 51/16) setting out the text of the Regulation postponing the application of the PRIIPs Regulation.

European Parliament Votes to Delay PRIIPS Regulation Application Date

 

On December 1, 2016, the European Parliament published a press release announcing that it has voted to delay the Regulation on key information documents (“KIDs“) for packaged retail and insurance-based investment products (“PRIIPs“) (Regulation 1286/2014) (PRIIPs Regulation).

The press release highlights that MEPs had criticized previous proposed standards requiring providers of PRIIPs to produce a KID as “flawed and misleading.” The Parliament has also published the text of the legislative resolution delaying the application date of the PRIIPs Regulation to January 1, 2018. This additional time is to enable those concerned to comply with the new requirements.

In September 2016, the Parliament announced that it had rejected the Delegated Regulation that the European Commission had adopted supplementing the PRIIPS Regulation with regard to regulatory technical standards (RTS) on the presentation, content, review and revision of KIDs. The Commission also proposed to extend the application of the PRIIPS Regulation by one year earlier in November 2016.

Joint Committee of ESAs Final RTS on Key Information Documents for PRIIPs

The Joint Committee of the European Supervisory Authorities (ESAs) published its final draft regulatory technical standards (RTS) on key information documents (KIDs) for packaged retail and insurance-based investment products (PRIIPs). The draft RTS include a mandatory template, which includes certain mandatory texts and details of the layout to use, a methodology for the assignment of each PRIIP to one of the seven classes in the summary risk indicator, and the requirements relating to the presentation of costs.

An accompanying press release states that the proposed KIDs provide retail investors, for the first time across the EU, with simple and comparable information on PRIIPs. It is intended that the three page document will increase the transparency and comparability of information about the risks, performance and costs of PRIIPs.

The draft RTS have been submitted to the European Commission for endorsement and will enter into force on December 31, 2016.