A Guernsey-based actuarial technology company has developed a global offering to help international asset managers to provide calculations required under the EU's new Packaged Retail and Insurance-based Investment Products (PRIIPs) regulations, which came into force at the beginning of the year.

Asset managers now need to adhere to new technical standards for key information documents (KIDs), which must include summary risk indicators, projected returns, and disclosure of costs for investment products. Penalties for not complying with the regulation range from being prohibited from marketing the PRIIP or significant fines. All new investment products and existing investment products marketing to retail investors in the EU will need to comply with the requirement for a KID.

The underlying calculations which feature in the document must be in line with the regulations and current practice guidelines, and accurately reflect the PRIIPs' investment qualities.

According to Guernsey-based actuarial technology company Dorey Financial Modelling, creating the numbers can be extremely complex.

"Product categorisation, the range of financial outcomes and costs can be complicated, and factors such as currency fluctuations, private equity, and fund wind-up dates come into play as well. All of this needs to be adequately explored with the product manufacturer and their legal teams, so we pay close attention and listen to the product manufacturers' forward-looking views. All KIDs require working closely with the product manufacturer to reflect their views of market practices and their expectations on risk," said Martyn Dorey, Managing Director of Dorey Financial Modelling.

The administration work to prepare KIDs is often outsourced to fund administration service providers and Guernsey administrators will be involved in this work.

"Guernsey has been in the investment funds business for over 50 years and in that time has built a considerable depth and breadth of expertise, ensuring we are more than capable of coping with whatever comes our way. The work currently carried out on PRIIPs by local firms is evidence of our adaptability and helps explain why global fund managers continue to find Guernsey such an attractive home for their products," said Haley Camp, chair of the technical committee of the Guernsey Investment Fund Association.

Dorey Financial Modelling has engaged with a number of administrators to provide the underlying calculations which feature in the KID and has worked with international administrators and managers based in Canada, the US, Europe and South Africa.

"Our long experience of specialised investment actuarial work means we have been well placed to deliver basic as well as very demanding KIDs," said Mr Dorey.

The PRIIPs regulations aim to help retail investors to understand and compare the key features, risks, rewards and costs of different PRIIPs, through access to a short and consumer-friendly information document.

For more information about Guernsey's finance industry please visit www.guernseyfinance.com.

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