The ‘Regulation on key information documents for packaged retail and insurance-based investment products’ (‘PRIIPs’) was published in the EU’s Official Journal on 9 December 2014.
Seamus O’Cuill from FundAssist has welcomed the development: “The industry now knows with certainty that every product captured under the PRIIPs Regulation requires to have a Key Information Document (‘KID’) in place by December 2016, and can plan accordingly. UCITS funds, which already produce a similar Key Investor Information Document (‘KIID’), have a longer transition period until December 2019.”
The following products are captured under the PRIIPs legislation:
| -UCITS Funds | -Pension products not recognised by national law as retirement products | ||||||||||
| -Retail AIFs | -Annuities (where pay-outs are subject to market fluctuations) | ||||||||||
| -Structured products and deposits | -Instruments issued by SPVs | ||||||||||
| -With-profits or traditional life insurance products with variable bonuses | -All derivative types | ||||||||||
| -Unit/index linked life assurance products | |||||||||||
Based upon the Regulation, the KID will be required to include the following information:
| -Product type and identifiers | -Performance | ||||||||||
| -Manufacturer contact details and details of other available documentation | -Recommended investment horizon and impact of early withdrawal | ||||||||||
| -Objectives | -Details of any insurance benefits | ||||||||||
| -Costs | -Procedures if the manufacturer/product is unable to pay out | ||||||||||
| -Risks | -Complaints procedures | ||||||||||
From the discussion paper on the KID content released in November 2014, it is clear that there will be significant differences between the KID and the existing KIID with numerous additional and different disclosures for costs, risk and performance.
Andrew Johnston from FundAssist commented that “Although we have 2 years to adopt the provisions of the legislation and a further 3 years for UCITS funds, it is important that the industry engages now to influence the form and content of the KID. The possible introduction of total cost calculations, multiple risk indicators and numerical disclosures, alongside future performance probability modelling will prove challenging for the industry. We would recommend to all product manufacturers to respond to the discussion paper, either directly or through us, outlining any issues or concerns, to shape the details of the final Level II Regulatory Technical Standard. In FundAssist, we have already prepared sample KIDs for our clients and will launch a suite of services to enable full ongoing compliance with PRIIPs legislation in early 2015.”
