EUROPE: Outcome of ESA Review of the PRIIPs Delegated Regulation

Wednesday July 22 2020

On 21^st July 2020, the European Supervisory Authorities (ESAs) announced that they have informed the European Commission of the outcome of the review conducted by the ESAs of the key information document (KID) for packaged retail and insurance-based investment products (PRIIPs).

This follows the ESAs’ consultation paper  published on 16 October 2019 on draft regulatory technical standards (RTS) to amend the technical rules on the presentation, content, review and revision of KID (Delegated Regulation (EU) 2017/653).

Outcome of ESA Review

The aims of this review have been to address the main regulatory issues that have been identified since the implementation of the KID, in particular regarding the information on performance and costs, and to allow the appropriate application of the KID by UCITS.

A draft Final Report following this public consultation was submitted to the three Boards of Supervisors of the ESAs for their approval in June.

ESA considered that the Report contained balanced and proportionate final proposals, which would allow the ESAs to meet their main policy objectives, while remaining in line with the PRIIPs level 1 framework (Regulation (EU) No 1286/2014).

The draft RTS was adopted at the EBA and ESMA Boards on the basis of qualified majority voting. At the EIOPA Board, although a large number of members agreed with the draft RTS, it did not receive the support of a qualified majority.

Those Board members that did not support the RTS, generally argued that a partial revision of the PRIIPs Delegated Regulation is not appropriate at this stage, prior to a comprehensive review of Regulation (EU) No 1286/2014 as envisaged in Article 33 of the Regulation. A number of Board members also indicated that for investment funds, they would prefer the past performance graph from the UCITS key investor information document to be included in the PRIIPs KID itself, rather than in a separate publication. As indicated in the draft Final Report, this would also have been ESA’s preference, and it was reiterated in their letter.

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