PRIIPs Delay

Of relevance to:
Most firms providing investment or investment services to retail investors, including AIFMs, UCITS Management Companies and the Authorised Fund Managers of NURS

The July edition of the Regulatory Roundup (Issue 78) included a reminder (“PRIIPs: Are you ready?”) that Regulation 1286/2014 on the provision of a Key Information Document (“KID”) for Packaged Retail and Insurance-based Investment Products (“PRIIPs”) applies from 31 December 2016.

At its heart, the concept behind Regulation 1286/2014 – which will apply to both PRIIP ‘manufacturers’ and to those that advise on or sell such products – is to help investors better understand and compare the key features, risks, rewards and costs of different PRIIPs by way of a KID. This requirement arises under Article 5 of the PRIIPs Regulation which states:

“Before a PRIIP is made available to retail investors, the PRIIP manufacturer shall draw up for that product a key information document in accordance with the requirements of this Regulation and shall publish the document on its website.”

The regulatory technical standards on the content, presentation etc. of the KID were contained in a Delegated Regulation (and Annexes).

A European Parliament (“EP”) Press Release of 14 September announced that the EP had rejected the proposed Delegated Regulation.

An ‘Item Note’ issued by the European Council advises that the Delegated Regulation “can no longer enter into force”.

This leaves firms in an unusual situation in that a Regulation – which is binding on all Member States – would apply from the end of this year but regulatory technical standards which would ensure consistent application of the requirement do not currently exist.

According to press reports, a majority of Member States have backed a call for a 12-month delay in the implementation of PRIIPs.