Following on from our update in the last edition of OAC Digest Roundup and Commentary Edition, there have been further significant developments in Europe.
On 8 March the European Commission adopted revised regulatory technical standards (RTS) on packaged retail and insurance-based investment products (PRIIPs), and has issued a Commission Delegated Regulation "(supplementing Regulation EU Number 1286/2014 of the European Parliament and of the Council on key information documents (KIDs) for PRIIPs) by laying down regulatory technical standards with regard to the presentation, content, review and revision of key information documents and the conditions for fulfilling the requirement to provide such documents". The Commission also issued at the same time accompanying revised Annexes. This represents an amended version of the RTS which was previously rejected by the European Parliament in September 2016.
The revised RTS will now be reviewed by the European Parliament and the Council, who have until 8 June 2017 to object to it or accept it. If no objection is raised within this timescale, then the RTS will be published in the Official Journal of the European Union and enter into force 20 days later. The date of application of the revised RTS will be 1 January 2018.
The Commission’s amendments concern multi-option PRIIPs, performance scenarios, comprehension alerts and presentation of costs in relation to biometric components of insurance-based investment products.
To give a little more detail, a fourth performance chart will be added alongside the three “future projection scenarios”. Consumers will now be presented with future projections based on “unfavourable”, “moderate” and "favourable" circumstances, but with also an additional “stress” scenario. This is as a result of MEPs and various other groups warning investors could be misled by the original plans. It is considered important that this fourth scenario is added because, under the original proposals, even risky products would have always shown upward trends.
The production of KIDs places a sizeable burden on insurance firms to comply with the detailed requirements and in time for the deadline of 1 January 2018. In response, OAC will be hosting a series of regional events within the next two months to provide clarity on the requirements in the RTS, to outline our PRIIPs KID Services (advisory, calculations and the production/checking of KIDs) and where firms can get together to share and discuss the specific challenges they face. Further details about these events will be announced in the coming weeks, however, please do not hesitate to contact Claire Lightwood for further information.
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Senior Regulatory Compliance Consultant
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