EUROPEAN UNION: PRIIPs KID RTS Adopted by European Commission

Friday March 17 2017

The European Commission (EC) has adopted revised regulatory technical standards (RTS) on PRIIPs together with revised Annexes.

The Commission’s amendments to the Delegated Regulation concern multi-option PRIIPs, performance scenarios, comprehension alert and presentation of administrative costs in relation to biometric components of insurance-based investment products.

Regulation (EU) No 1286/2014 (PRIIPs Regulation) requires manufacturers of Packaged Retail and Insurance-based Investment Products (PRIIPs) to draw up ‘Key Information Documents’ (KIDs) for these products before they are made available to retail investors, and those selling or advising on these products to provide the KIDs to retail investors in good time before they buy those products.

The PRIIPs Regulation empowers the European Banking Authority established by Regulation (EU) No 1093/2010, the European Insurance and Occupational Pensions Authority established by Regulation (EU) No 1094/2010 and the European Securities and Markets Authority established by Regulation (EU) No 1095/2010 to jointly develop regulatory technical standards (RTS) specifying the elements of the KID, namely the presentation and the content of the KID, including methodologies for the calculation and presentation of risks, rewards and costs within the document (Article 8(5) of the PRIIPs Regulation).

Article 10(2) of the PRIIPs Regulation also empowers the European Supervisory Authorities (ESAs) to develop RTS on the review, revision and publication of the KID and Article 13(5) on the conditions for fulfilling the requirement to provide the KID in good time to the retail investor. On 6 April 2016, the ESAs jointly submitted the draft RTS to the Commission.

On 30 June 2016, the Commission adopted a Delegated Regulation supplementing the PRIIPs Regulation (Delegated Regulation) which specifies the presentation and the content of the KID and its standardised format, the methodology underpinning the presentation of risk and reward and the calculation of costs, the conditions and the minimum frequency for reviewing the information contained in the KID and the conditions for fulfilling the requirement to provide the KID to retail investors.

On 14 September 2016, the European Parliament objected to the Delegated Regulation.

In order to address the concerns expressed by the European Parliament, the Commission, in a letter of 10 November 2016, proposed to the ESAs amendments to the Delegated Regulation as regards multi-option PRIIPs, performance scenarios, comprehension alert and presentation of administrative costs in relation to biometric components of insurance-based investment products. Under the sixth subparagraph of Article 10(1) of Regulation (EU) No 1093/2010, of Regulation (EU) No 1094/2010 and of Regulation (EU) No 1095/2010, the ESAs may amend the draft RTS within six weeks on the basis of the Commission’s proposed amendments and resubmit the amendments in a formal Opinion to the Commission. On the expiry of that six week period, the ESAs did not adopt the final Opinion. Consequently, under the seventh subparagraph of Article 10(1) of Regulation (EU) No 1093/2010, of Regulation (EU) No 1094/2010 and of Regulation (EU) No 1095/2010, the Commission may adopt RTS with the amendments it considers relevant.

Click here for legal elements of the Delegated Act.

Click on the link above for further details.