Wednesday May 11 2022

News Source: Fund Regulation


Type: General

Country: European Union

The European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) have published their technical advice to the European Commission on the review of the PRIIPs Regulation. The advice will serve as input for developing the Commission’s Retail Investment Strategy.

Taking into account the details provided by the European Commission in January 2021 on their intended approach to this review of the PRIIPs Regulation, the ESAs recommend significant changes to the PRIIPs Regulation and encourage the Commission to consider a broad review of the PRIIPs framework as well as to undertake appropriate consumer testing before formulating proposals for changes. The recommended changes aim to improve the presentation of information provided to consumers and to make it easier for them to compare different products.

The advice addresses all the issues requested by the Commission, including how to better adapt the key information document (KID) to the digital age and whether to extend the scope of the Regulation to other financial products. Additionally, it presents the ESAs’ recommendations on a range of other issues where analysis has shown that changes are needed to achieve optimal outcomes for retail investors. In particular, the ESAs are of the opinion that the KID would prove more useful to retail investors if presented in a much simpler and more user-friendly format.

In more detail, the ESAs recommend:

  • harnessing the opportunities of digital disclosure, such as by allowing information to be presented in a “layered” format;
  • not extending the scope to additional financial products at this stage, but further specifying the existing scope;
  • allowing different approaches for different types of products where this is necessary to ensure the appropriate understanding of retail investors;
  • allowing more flexibility on the information provided in the performance section of the KID including the indication of past performance;
  • changing the rules for multi-option insurance products to better facilitate comparison between different investments; and
  • introducing a new section in the KID to give prominence to sustainable objectives.

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