Regulation on Key Information Documents for Packaged Retail and Insurance-based Investment Products (PRIIPs)
The Regulation on Key Information Documents for Packaged Retail and Insurance-based Investment Products (PRIIPs) introduces the so-called key information document (KID), a simple document giving key facts to investors in a clear and understandable manner, covering not only collective investment schemes but also other "packaged" investment products offered by banks or insurance companies.
The EU Regulation defines a PRIIP as any product which meets one of the following definitions:
- packaged retail investment product, which is an investment where the amount repayable to the 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 investor;
- insurance-based investment product, which is an insurance product which offers a maturity or surrender value and where that maturity or surrender value is wholly or partially exposed, directly or indirectly, to market fluctuations.
By way of example, the following products in the retail market will be PRIIPs:
- investment funds, including UCITs following a five-year transitional period;
- insurance investment products, such as unit-linked or with-profits policies; and
- structured products, such as deposits and securities.
The scope of the Regulation will cover a wide range of products.
The European Commission has proposed a postponement of the PRIIPs application date. The delay gives issuers and distributors of PRIIPs products until 1 January 2018 to put the provisions in place.
PRIIPs: the highlighted parts of the value chain are affected