The regulation lays down uniform European rules on format and content of a key information document (KID) for Packaged Retail and Insurance-based Investment Products that are offered to retail clients. PRllPs relate to investment products with structured features i.e. the repayable amount is subject to an underlying reference value or the performance of asset(s) not directly held. Manufacturers and distributors of PRllPs are in scope. The manufacturer has the obligation to prepare, publish and maintain a pre-contractual KID for each PRllP, summarising the PRllPs features, risks, performance scenarios and costs. In September 2016, the European Parliament rejected the KID specific RTS. As a result of the rejection, the European Commission and the supervisory authorities are revising the RTS and extended the date of application to January 2018.
A broad range of sectors is impacted: investment management, banking, insurance, pension and (securitization) SPVs. PRllPs would increase the transparency and comparability of retail investment products, which is expected to increase competition in Europe. Accurate application of PRllPs requires identifying the banking, insurance and investment management products in scope. The KID production, review and publication processes would then be established, based on the decision of an in-house or outsourced production process and clear segregation of responsibilities between the several departments involved. Finally, consistency of PRllPs with other relevant regulations and consistency of KID information with other product documentation would be ensured.
Author: Ivo Habets