Updated: October 2019
The review of PRIIPs should be a key priority for the new Commission. After two years of implementation, it is
crucial to ensure a consumer-friendly KID and to tackle the challenges raised above. ESBG believes that the
scope of the Regulation should be reviewed in order to provide legal clarity and certainty on which products
fall in the scope and to exclude OTC derivatives (as in most cases they are not investment products) from
We would encourage the ESAs to review the Delegated Acts in order to improve the methodology to calculate
the performance scenarios and costs as this is creating major problems. In our opinion, new changes in the
Delegated acts should be subject to consumer
testing, meaning that the effects that the
amendments will have on consumers’ behaviour
and understanding should be assessed.
The EU has adopted a Regulation on packaged
retail investment and insurance products (PRIIPs)
which obliges those who produce or sell
investment products to provide investors with key
information documents (KIDs). 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 is intended to
make clear to every consumer whether or not
they could lose money with a certain product and
how complex the product is.
The PRIIPs Regulation entered into application
on 1 January 2018, following a one-year delay.
As for an amendment of Art. 33, the European
Commission should issue a review of the PRIIPs
regulation by year-end 2019 in order to address
implementation issues. In the meanwhile, ESAs is
working on a review of the PRIIPs Delegated Regulation during 2019 in order to analyse potential changes
in the performance scenario, in the differentiation between different types of PRIIPs and in the costs.
ESBG believes that there are still open issues in the PRIIPs, in particular in the following areas:
Calculation of the performance scenarios in the KID:
For some products the outcomes of the calculation of the performance scenarios are absurd. KIDs that
are drafted in full compliance with the legal requirements could contain information that can be false and
misleading for investors The following issues have been identified:
ESBG is very concerned that this information is misleading and goes directly against the obligation to present
information to the client that is fair, clear and non-misleading. This creates the situation that manufacturers are
urged to provide false information in order to comply with the legal requirements.
The scope of the PRIIPs Regulation is not fully clear for some products (especially foreign exchange derivatives
and corporate bonds), which creates legal uncertainty. ESBG also believes that OTC derivatives– or at least
products that obviously hedging products – should not be within the scope of PRIIPs since in most cases they
are not investment products.
The Key Information Documents (KIDs) that
are drafted in full compliance with the legal
requirements contain information that can be false
and misleading for investors. Manufacturers and
distributors of PRIIPs are confronted with many
questions regarding the contents of the KIDs.
The European supervisors have already stated
that some of the legal requirements to draw up
the KIDs can be misleading for clients.
They recommended to manufactures to include a
warning statement for the retail investors: ‘in view
of the potential risk that the performance
scenarios may provide retail investors with
inappropriate expectations about the possible
returns they may receive, it is recommended to
include a statement in the KID warning the retail
investor of the limitations of the figures shown’.
The ESAs should tackle these issues for the
review of the Delegated acts in 2019.