On November 8, 2018, the ESAs launched a consultation on amendments to the Key Information Document for Packaged Retail and Insurance-based Investment Products. Since January 1, 2018, the EU PRIIPs Regulation has required manufacturers of PRIIPs to prepare and publish a stand-alone, standardized Key Information Document for each of their PRIIPs. Those advising retail investors on PRIIPs, or selling PRIIPs to retail investors, must provide retail investors with a KID in good time before the transaction is concluded.
The PRIIPs Regulation exempts until December 31, 2019 management and investment companies and persons advising on or selling Undertakings for Collective Investment in Transferable Securities from the obligation to produce and provide a PRIIPs KID. The UCITS Directive requires these entities to provide investors with a Key Investor Information Document. As a result, if there were no changes made to the EU legislation, UCITS would be subject to duplicative information requirements from January 1, 2020. To address this situation, the ESAs are proposing to amend the RTS under the PRIIPs Regulation by moving the UCITS KIID requirements to the PRIIPs RTS.
The ESAs are also proposing certain other targeted amendments to the PRIIPs KID requirements. These changes include, among other things, requiring PRIIP manufacturers to include information on past performance in the KID, amending the narrative explanations for performance scenarios, requiring the use of the risk-free rate of return instead of historical prices and requiring the presentation of future performance scenarios as a range either in tabular or graphical format.
The consultation closes on December 6, 2018. It is proposed that the amendments will apply from January 1, 2020. To allow time for the EU legislative process to conclude and to provide PRIIP manufacturers and sellers with at least six months to implement the changes, the ESAs intend to submit the final draft RTS to the European Commission for endorsement in January 2019.
The ESAs confirm that the review of the effects of the PRIIPs framework has been delayed by the European Commission so that further evidence and data can be collected to assist the review. It is likely that further amendments to the PRIIPs Regulation will emerge from that more in-depth review.
The consultation paper is available at: https://eiopa.europa.eu/Publications/Consultations/Joint%20Consultation%20Paper%20on%20targeted%20amendments.pdf.
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