Cayman Islands: PRIIPS – What You Need To Know

Last Updated: 14 October 2016
Article by Garry Ferguson, Paul Farrell, Andrew Traynor, Gayle Bowen, Noeleen Ruddy, Claire O'Shaughnessy, Eoin O’Connor and Shane Martin

Most Read Contributor in Cayman Islands, November 2017

What is it?

Regulation (EU) No 1286/2014 of the European Parliament and Council on key information documents for packaged retail and insurance-based investment products ("PRIIPs" or the "Regulation").

PRIIPs introduces a new pan-European pre-contractual product disclosure document – a key information document, or "KID" – with the objective of enabling retail consumers to make informed choices and compare products when they are considering buying packaged retail and insurance-based investment products.

Details on the required content and underlying methodology for KIDs were set out in draft Regulatory Technical Standards ("RTS") developed by the European Commission.

What does PRIIPs apply to?

A PRIIP is a product that falls into one or both of the following categories:

Packaged retail investment product an investment (including instruments issued by special purpose vehicles under Solvency II or securitisation special purpose entities under AIFMD) where, regardless of the legal form of the investment, the amount repayable to the retail investor is subject to fluctuations because of exposure to reference values or to the performance of one or more assets which are not directly purchased by the retail investor; and/or
Insurance-based investment product an insurance product which offers a maturity or surrender value and where that maturity or surrender value is wholly or partially exposed, directly or indirectly, to market fluctuations.

This broad definition means that products ranging from investment funds (including UCITS and retail AIFs) to futures, options or structured products are within the scope of the Regulation and subject to the requirements set out therein. There has been ongoing debate and discussion at industry level in relation to the applicability of PRIIPs to derivatives, and the Commission has confirmed that derivatives are in scope. UCITS providers are already required to produce KIDs under UCITS IV and thus a transitional period up to 31 December 2019 applies, during which UCITS providers are exempt from the requirements under PRIIPs.

The Regulation explicitly excludes the following from its scope:

  • Non-life insurance products listed in Annex I to Solvency II
  • life insurance contracts where the benefits under the contract are payable only on death or in respect of incapacity due to injury, sickness or infirmity;
  • deposits other than structured deposits as defined in MIFID II:
  • securities as referred to in points (b) to (g), (i) and (j) of the Prospectus Directive, being assets that are held directly, such as corporate shares and sovereign bonds;
  • pension products which, under national law, are recognised as having the primary purpose of providing the investor with an income in retirement and which entitle the investor to certain benefits;
  • officially recognised occupational pension schemes within the scope of the Occupational Pension Funds Directive or Solvency II;
  • individual pension products for which a financial contribution from the employer is required by national law and where the employer or the employee has no choice as to the pension product or provider


The requirements of the Regulation are scheduled to come into effect on 31 December 2016 (other than for UCITS).

What else?

There is, however, significant disquiet in the industry around the scope of the Regulation, the timing involved and the appropriateness of the information to be included in KIDs. In September the draft RTS were rejected by the European Parliament, who stated that the legislation was flawed and misleading and likely to cost investors money. The Parliament echoed the industry position by calling on the Commission to consider postponing the application date of the Regulation for one year, until 1 January 2018, stating that such a postponement would provide time to clarify open questions and reach the goals of PRIIPs. The Parliament expressed concerns relating to, amongst other things, the proposed methodology for the calculation of future performance scenarios, a lack of clarity relating to the treatment of multi-option products and that a lack of detailed guidance on the comprehension alert may create a serious risk of inconsistent implementation across the single market.

The Commission will now have to propose new RTS for implementing the Regulation addressing the Parliament's concerns. There will be significant pressure to prepare and approve these new RTS in good time for entry into force with the Regulation on 31 December 2016, particularly given that the possibility of implementing PRIIPs without finalised RTS was previously rejected by the Parliament's Committee on Economic and Monetary Affairs. The desired postponement in implementation of the Regulation now seems a very likely prospect.

Who is affected?

Manufacturers and sellers of packaged retail investment products and insurance-based investment products, and persons advising on or selling such products. This includes credit institutions, MIFID firms, insurance undertakings, fund managers and other retail product distributors. The responsibility for delivering the KID lies with the person or entity advising or selling the PRIIP to the investor - the PRIIP manufacturer or the distributor.

These entities will need to begin providing retail investors with prescriptive KIDs from the end of this year (31 December 2016 - although note the transitional provisions in relation to UCITS).

What's required?

The draft RTS initially prepared by the Commission specifying the contents of the KID were published on 30 June 2016, with the objectives of ensuring that all retail investors have access to standardised information that will allow them to understand and compare the economic and legal features of the PRIIP and make informed investment decisions, as well as providing them with an overview of the investment policy and strategy of the PRIIP and the risks associated with them – particularly market risk, credit risk and liquidity risk.

In the interests of establishing a common template for KIDs, the RTS set out detailed requirements relating to the content and presentation of the KID, including

  • a general information section containing information on the PRIIP manufacturer and its competent authority
  • information on the type of product, the objectives and strategies associated with it, the type of retail investor to whom the product is marketed and the term of the PRIIP;
  • the level of risk associated with the product using a summary risk indicator, indication of possible maximum loss and performance scenarios;
  • information on the consequences of the PRIIP manufacturer being unable to pay out;
  • detailed information on costs, including methodology for calculations;
  • rationale for recommended holding periods or minimum required holding periods; and
  • outline of complaints procedure.

The RTS includes a template form of KID.

The Parliament's rejection of these RTS means that revised RTS will be forthcoming, but creates unfortunate uncertainty for those market participants who are subject to the Regulation and working to prepare for compliance within the existing timeframes.

What's next?

Notwithstanding the uncertainty around timing and content of the level 2 measures, the requirements of the Regulation are unlikely to change. Consequently PRIIPS product manufacturers, distributors and advisers will need to consider their plans for operational aspects of the new regime, and continue working to position themselves for compliance by 31 December of this year insofar as is possible.

Some of the practical steps that can be taken include:

  • identification and analysis of products in scope;
  • assessment of distribution processes and split of responsibilities between manufacturer, distributer and advisers/sellers;
  • compilation of information on types of investment products manufactured, risk profiles, costs, calculations and target markets;
  • establishing procedures for production of KIDs and information-gathering and monitoring for maintenance and update of KIDs;
  • preparing procedures for publication and distribution of KIDs; and
  • establishing sufficient complaints procedure for investment products

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions