The post UK PRIIPs Regulation published – KIDs required 1 January 2018 first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>| Of relevance to: | Manufacturers of packaged retail and insurance-based investment products and persons advising on, or selling, those products to retail investors Don’t be caught unawares – if you have staff invested or distributors, you could be caught! |
| Key date: | Applicable from 1 January 2018 |
EU Regulation No 1286/2014 (the “PRIIPs Regulation”) requires those manufacturing a packaged retail and insurance-based investment product (“PRIIP”) to draw up a key information document (“KID”) containing standard information, and requires persons advising on or selling PRIIPs to provide the KID to retail investors, with effect from 1 January 2018.
The UK PRIIPs Regulations (Statutory Instrument 2017 No.1127: The Packaged Retail and Insurance-based Investment Products Regulations 2017) have been laid before Parliament and similarly come into force on 1 January 2018. They designate the FCA as the competent authority in the UK for the purposes of the PRIIPs Regulation and give the FCA certain enforcement powers.
Where a person has infringed the requirements of the PRIIPs Regulation, these enforcement powers include the power to:
The FCA also now has the power to impose penalties and make a statement (such as a ‘supervisory notice’, ‘warning notice’ or a ‘decision notice’) in relation to a contravention of the PRIIP Regulation.
Where any of these have been actioned, the FCA may—
The UK PRIIPs Regulations make the following important additions:
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]]>The post PRIIPs: Key Information Document Guidelines first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>Guidelines (“Communication from the Commission”) on the application of the KID under PRIIPs have now been published.
It’s fairly modest in length – four pages in total – but clarifies various areas including, but not limited to:
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]]>The post PRIIPs: Implementation Delay Confirmed first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>As advised in Regulatory Roundup 80, the European Parliament rejected a proposed Delegated Regulation which was a key part of the Packaged Retail and Insurance-based Investment Products Regulation (“PRIIPs”).
The core provision behind PRIIPs – which applies to both PRIIP ‘manufacturers’ and to those that advise on or sell such products – is the need provide a Key information Document (“KID”) “before a PRIIP is made available to retail investors”.
The regulatory technical standards (“RTS”) on the content, presentation etc. of the KID were contained in the (rejected) Delegated Regulation and its associated Annexes. Given that PRIIPs applies from 31 December 2016 the rejection of the Delegated Regulation so late in the day causes obvious problems for firms. Whilst PRIIPs on its own is clear, the RTS is essential for the format and methodology used to compile the KID.
Fortunately the European Commission has proposed an extension to the date of application of the PRIIPs Regulation by one year.
The European Commission press release informs us that “the revised PRIIPS framework should be in place during the first half of 2017 and apply as of 1 January 2018”.
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]]>The post PRIIPs: Are you ready? first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>As mentioned in Regulatory Roundup 61, Regulation 1286/2014 on the provision of key information documents for packaged retail and insurance-based investment products (“PRIIPs”) applies from 31 December 2016. Being a Regulation rather than a Directive, it will apply in all member States from that date without the need for any individual legislation.
Note that UCITS will be exempt from PRIIPs until 31 December 2019 (Article 32(1)). The same is true for NURS where so elected by virtue of Article 32(2) (see below).
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 key information document (“KID”). The regulatory technical standards on the content, presentation etc. of the KID can be found in a Delegated Regulation (and Annexes).
In the light of this, the FCA has now published Consultation Paper CP16/18 “Changes to disclosure rules in the FCA Handbook to reflect the direct application of PRIIPs Regulation”.
The FCA expects that the PRIIPs Regulation will apply to firms such as (this is not an exhaustive list – see paragraph 2.14 of CP16/18):
There is no definitive list of what constitutes a PRIIP but rather we need to look at the characteristics of the product (as per Articles 4(1) & (2) of 1286/2014) where:
“regardless of the legal form of the investment, the amount repayable to the retail investor is subject to fluctuations because of exposure to reference values or to the performance of one or more assets which are not directly purchased by the retail investor, or which is an insurance product that offers a maturity or surrender value that is wholly or partially exposed, directly or indirectly, to market fluctuations”.
The FCA has set out a list of products that it considers will fall within the definition of a PRIIP (see paragraph 2.8 of CP16/18) including, but not limited to, (it is appreciated that some may overlap):
It must be emphasised that the above is not a definitive list and reference should be made to paragraphs 2.8 to 2.10 – the latter provides examples of what is not a PRIIP. As mentioned in paragraph 2.7 “Identifying whether a particular product is a PRIIP may not always be straightforward …..”.
As mentioned above, because UCITS require the production of a ‘Key Investor Information Document’ (“KIID”), UCITS Management Companies will not be required to comply with the PRIIPs Regulation until 31 December 2019. Authorised Fund Managers (“AFM”) of NURS can also provide a similar document (referred to as a NURS-KII document) if they so elect (subject to a modification by consent). Where a NURS-KII is produced then certain Handbook rules relating to packaged products (which includes a unit in a NURS) are disapplied e.g. commission disclosure requirement (COBS 6.4.3(4), key features document requirement (COBS 13.1.3(2)(c)) and various product information requirements arising in COBS 14. The consultation paper proposes rules changes to the Handbook so that the AFM of a NURS can either:
Note that the current modification by consent will cease to apply after 30 December 2016 and the rules proposed in CP16/18 will replace it.
Comments on CP16/18 are invited by 19 September 2016.
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