Packaged Retail Investment Products (PRIIPs)
>> See ESBG paper on PRIIPS
Updated: 17 January 2017
ESBG position on PRIIPs
ESBG welcomes the adoption of the PRIIPs Regulation and in particular the postponement of this application date as a solution to the delayed adoption of the technical standards.
Additional clarifications are needed, however, on important aspects of the provisions. In particular, the most pressing open questions are how to handle products manufactured before 1 January 2018, the provision of the KID in portfolio management services and other scope issues for specific OTC derivatives.
Background on EU PRIIPs legislation
The Key Information Documents for Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation is a European legislation that aims to improve financial product information to consumers by introducing a new, innovative standard for consumer-friendly information; the 'Key Information Document' (KID). The PRIIPs Regulation foresees that, starting from 1 January 2018, every manufacturer of investment products (e.g. investment fund managers, insurers, banks) will have to produce such a document for each investment product.
A typical KID will provide information on the product's main features, as well as the risks and costs associated with the investment in that product. Information on risks aims at being as straight-forward and comparable as possible, without over-simplifying often complex products. The KID will make clear to every consumer whether or not they could lose money with a certain product and how complex the product is.
The KIDs will follow a common standard as regards structure, content, and presentation. In this way, consumers will be able to use the document to compare different investment products and ultimately choose the product that best suits their needs. The products for which a KID will be required include all types of investment funds, insurance-based investments and retail structured products, and private pensions.
>> See ESBG paper on PRIIPS