The European Parliament (EP), in its plenary last Wednesday,
voted in favour of its ECON Committee's1 'Motion
for a Resolution.' In other words, the EP rejected the
regulatory technical standards (RTS) of the PRIIPs
Regulation,2 following the advice of the ECON Committee
in doing so. The RTS were meant to further define the presentation
and content of the PRIIPs Key Information Document (KID).
The EP's reason for rejecting the RTS is that they believe
the European Commission (EC) has not taken into consideration the
EP's concerns on several points of the RTS (the flaws in the
methodology for the calculation of future performance scenarios and
the approach on multi-option products, for example).
Besides rejecting certain aspects of the RTS content, the EP has
also requested the EC to consider a delay in the application of the
PRIIPs Regulation itself, since the legislative body is of the
opinion that level 1 should be implemented at the same time as the
RTS to avoid uncertainty in the industry's
implementation—uncertainty that would threaten 28 different
implementations of the same regulation. In addition, the European
Supervisory Authorities (ESAs) are currently preparing the third
level of the regulatory framework, the guidelines or
questions-and-answers document (Q&As), aimed at providing
further guidance for those implementing the PRIIPs Regulation.
At present, the question posed by the industry is: but what
happens next? On this topic, Insurance Europe (the European
insurance federation) has helped shed some light on the challenging
approval process of the RTS and the debated delay of the PRIIPs
According to Insurance Europe, the EC will now need to call on
the ESAs to redraft the RTS. Once the ESAs have the new RTS ready,
they will send them to the EC, which will have to carry out an
internal consultation procedure before adopting the new RTS. The EP
and Council will then begin a scrutiny period which can be
undertaken following one of the timelines below:
2 months with the possibility to request an additional month
3 months with the possibility to request an additional 3 months
if the EC makes changes to the version of the RTS submitted by the
If, following the timelines above, the amended RTS are not
available on 31 December 2016, two scenarios will be possible:
the PRIIPs Regulation will have to be implemented without RTS,
making it nearly impossible to be applied in a coherent and
efficient manner across Europe and across sectors; or
the implementation date of the PRIIPs Regulation will have to
be extended in order for the RTS process to happen in a normal
fashion. In this case, the EC would have to submit a proposal to
delay the application. This amendment would be adopted following an
accelerated ordinary legislative procedure.
But what about level 3? The publication of guidelines or
Q&As is independent from the two texts mentioned above, since
they are published by the ESAs unilaterally without any input from
the EP, the EC, or the Council. It is, however, unlikely that the
ESAs would issue these guidelines before there is full clarity on
the new RTS, so as to ensure that the guidelines are aligned to new
RTS. The EC and the ESAs' priority is now to provide new
information to the industry as soon as possible.
1.European Parliament's Committee on Economic and
Monetary Affairs (ECON)
2.Regulation (EU) No 1286/2014 of the European Parliament
and of the Council of 26 November 2014 on key information documents
for packaged retail and insurance-based investment products
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