20 July 2019
On 18 May 2016, the European Commission responded in the negative to industry calls to delay the implementation of the regulation on key information documents for packaged retail and insurance-based investment products (the PRIIPS Regulation).
The PRIIPS Regulation introduces a standardised pre-contractual disclosure document (the KID) for manufacturers and distributors of PRIIPs and applies to investment products such as investment funds, life insurance policies with an investment element and structured deposits. By 31 December 2016, all manufacturers of PRIIPS and those advising or selling must prepare a KID for each PRIIP.
In recent months, the European financial associations and Insurance Europe had lobbied intensively on behalf of industry to delay the implementation of the KID for PRIIPS, citing the timelines as being unrealistic given the significant operational challenges for manufacturers to overcome.
The suggested timelines for the final Regulatory Technical Standards (RTS) was understood to be the third quarter of 2016, leaving only a number of months for industry to meet the 31 December 2016 deadline. In particular, Insurance Europe had recently pointed out the current draft RTS would mislead consumers owing to design faults and, furthermore, that the insurance industry needs sufficient time to programme, test and launch the KID correctly.
In response to a formal request for postponement submitted by the representative bodies of the EU banking, insurance and asset managers industries in late April 2016, the Commission has now responded through a letter from Commissioner Jonathan Hill. In summary, the Commission’s position as outlined in the letter is as follows:
The Commission’s refusal to postpone implementation of the PRIIPs Regulation represents a considerable blow for industry. There are many areas where more detail and guidance will be needed, and quickly, if manufacturers and distributors are to achieve the 31 December 2016 deadline.