On 30 December 2014, the PRIIPs Regulation entered into force. It aims at improving investor protection by introducing a mandatory key information document (KIDs) for banking, insurance, structured securities and fund products that target the retail segment. The long awaited Packaged Retail and Insurance based Investment Products (PRIIPs) Regulation is expected to apply directly in all Member States from 31 December 2016 and is complementary to MiFID II and IMD.
The objective of the Regulation is twofold: to ensure that retail investors are able to understand a product and its associated risks, and to facilitate the comparison between products to enable investors to make an informed investment decision, as well as to introduce a level playing field between the different product manufacturers and sellers through harmonization of the product disclosure rules.
To assess whether an investment product falls within the scope of the Regulation, two elements are to be considered:
The following instruments are considered to be in-scope:
Not in-scope are
Each KID will have to follow a common standard as regards structure, content and presentation and shall contain inter alia
An introductory statement with
Specific sections are required the content of which is detailed in the Regulation:
Member States must lay down rules to establish appropriate administrative sanctions and measures. Upon breach of the provisions of the Regulation, national competent authorities should have the power to impose adequate penalties.
Administrative sanctions include:
Administrative pecuniary sanctions include:
Firms failing to comply will come under scrutiny due to an increased disclosure to the public.