1. SOLVENCY II

1.1 European Commission publishes ITS on templates for the submission of information necessary for supervision under Solvency II

On 5 May 2023, Commission Implementing Regulation (EU) 2023/894 laying down implementing technical standards (ITS) for the application of the Solvency II Directive (2009/138/EC) with regard to the templates for the submission by insurance and reinsurance undertakings to their supervisory authorities of information necessary for their supervision and repealing Implementing Regulation (EU) 2015/2450 (Implementing Regulation) was published in the Official Journal of the European Union (OJ). 

The Implementing Regulation contains various supervisory reporting templates including:

  • Templates For Supervisory Reporting;
  • Quantitative Reporting Templates for Individual Undertakings; and
  • Quantitative Reporting Templates for Groups.

The text of the Implementing Regulation can be accessed here.

2. EUROPEAN INSURANCE AND OCCUPATIONAL PENSIONS AUTHORITY (EIOPA)

2.1 EIOPA updates Q&As on Regulation

During the second quarter of 2023, the European Insurance and Occupational Pensions Authority (EIOPA) published updated Q&As on the following topics, relating to the Solvency II Directive:

3. INSURANCE DISTRIBUTION DIRECTIVE (IDD)

3.1 EU Commission adopts Retail Investment Strategy

On 24 May 2023, the European Commission published its Retail Investment Strategy seeking to "empower retail investors to make investment decisions that are aligned with their needs and preferences, ensuring that they are treated fairly and duly protected".

The proposal comprises:

  • a Directive amending rules set out in the Undertakings for Collective Investment in Transferable Securities Directive (UCITS Directive) 1 , the Solvency II Directive2 , the Alternative Investment Fund Managers Directive (AIFMD) 3 , MiFID II4 , and the Insurance Distribution Directive (IDD) 5 (the Omnibus Directive Proposal), which can be accessed here; and
  • a Regulation amending the Packaged Retail and Insurance-based Investment Products Regulation (PRIIPs Regulation) 6 , in particular with regard to rules on the key information document (KID), which can be accessed here.

(together, the Legislative Proposals).

The European Commission aims to amend organisational and conduct requirements for various types of financial firms and to align regulatory requirements across different distribution channels.

The Legislative Proposals include the following measures:

  • The modernisation of disclosure rules, adapting them to the digital age and investors' sustainability preferences;
  • The development of benchmarks against which the value of financial products need to be assessed;
  • The addressing of potential conflicts of interest by banning inducements for "execution-only" sales and strengthening conditions where inducements are allowed;
  • Ensuring financial advisors examine retail investors' financial situation more carefully;
  • Requiring that marketing be fair, clear and not misleading also via digital channels and finfluencers;
  • The improvement of both financial advisors' and retail investors' knowledge of financial markets;
  • The improvement of investor categorisation by reforming the eligibility criteria for professional investors; and
  • The enhancement of supervisory cooperation between national competent authorities and the European Supervisory Authorities (ESAs).

4. PRIIPS

4.1 Publication of Consolidated FAQ on PRIIPS Regulation

On 17 May 2023, the ESAs published a consolidated Q&A containing all responses given by the European Commission on the PRIIPs Regulation (coded in blue) as well as all responses provided by the ESAs relating to the practical application or implication of the PRIIPS Regulation and its delegated acts to date (not colour coded).

A copy of the consolidated Q&A can be accessed here.

4.2 European Commission proposes amendments to PRIIPs Regulation

On 24 May 2023, the European Commission published its Retail Investment Strategy which, in addition to the proposed measures set out at Section 3.1 above, proposes targeted changes to the PRIIPS Regulation which are intended to improve information for investors and their ability to take well-informed decisions as well as adapting disclosures to the digital environment. 

The proposed changes to the PRIIPS Regulation and related implementing measures include (but are not limited to):

  • The inclusion of a new section in the PRIIPS KID entitled "How environmentally sustainable is this product" which is intended to complement the existing EU sustainable finance disclosure framework;
  • The inclusion of a new "dashboard" of key information on the first page of the PRIIPS KID which will provide information on the summary risk indicator, "total costs" figure and recommended holding period;
  • Clarifying that certain types of corporate bonds with make-whole causes are out of the scope of the PRIIPs Regulation provided that they are redeemed at a fair value;
  • Amending the rules for presenting costs of multi-option products (MOPs); and
  • Introduction of other changes to adapt the PRIIPS KID to a digital environment.

The legislative proposals put forward by the European Commission must now be considered by the European Parliament and the Council of Europe.

The proposed amendments to the PRIIPS Regulation can be accessed here.

A Dillon Eustace briefing on the topic can be accessedhere.

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Footnotes

1. Directive 2009/65/EC

2. Directive 2009/138/EC

3. Directive 2011/61/EU

4. Directive 2014/65/EU

5. Directive 2016/97

6. Regulation (EU) No 1286/2014

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