Friday August 7 2020
News Source: Fund Regulation
Focus: PRIIPS KID
Country: European Union
On 04th August 2020, the European Fund and Asset Management Association (EFAMA) issued a letter to the European Commission on the subject of the PRIIPS draft Regulatory Technical Standards (RTS), calling for an immediate extension of the UCITS exemption, as well as an urgent Level 1 review of the regulation.
In their letter, EFAMA acknowledged the tireless efforts made by the ESAs’ over the last 18 months in trying to find a workable solution to address the current flaws of the PRIIP KID while staying in line with the Commission’s understanding of the intentions of the Level 1 Regulation. However, also agreed with the ESAs that fundamental issues with the PRIIP KID remain, which cannot be solved through technical changes at Level 2 alone.
Together with a growing number of National Competent Authorities, the High-Level Forum on CMU and Better Finance EFAMA calls in its letter to the Commission for an immediate Level 1 review, as legally required by the PRIIPs Regulation. The association believes that this long-overdue review is now unavoidable and should be initiated with urgency to prevent further harm to the interest of retail investors.
While addressing the existing flaws in the PRIIP KID, the technical review was also meant to provide the legal basis for funds to switch from the UCITS KIID to the revised PRIIP KID on 01 January 2022. This timeline can no longer reasonably be upheld, as the industry must be given sufficient lead time to implement the changes.
Therefore, EFAMA also calls for the current exemption for funds producing a UCITS KIID to be extended until a full PRIIPs review (Level 1 and 2 including a 12-month implementation period) has been completed. To avoid further confusion among investors and preserve the worldwide reputation of the UCITS framework, the well-functioning UCITS KIID should not be replaced with a PRIIPS KID before the well-documented flaws affecting the latter are remedied.
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