PRIIPs Update: European Commission adopt revised PRIIPs RTS
10th September 2021
On 7 September 2021 the European Commission have (finally) published an updated Delegated Regulation and supporting Annexes to amend the regulatory technical standards (RTS) for packaged retail and insurance-based investment products (PRIIPs).
The amendments to Delegated Regulation (EU) 2017/653 come almost two years after the launch of a public consultation by the European supervisory authorities (ESAs) and seven months after the ESAs submitted draft RTS to the Commission.
As expected, the delegated regulation applies from 1 July 2022 meaning the transitional period for the UCITS to PRIIPs transition has been extended from 31 December 2021 by six months.
However, given that adoption was expected in June 2021 leaving the industry with twelve months to implement the new rules, has this delay and impact on the implementation timeframe caused more difficulties for PRIIPs manufacturers and distributors?
EFAMA and a number of other financial industry associations have already raised their concerns and called for a twelve-month implementation period as a minimum; this would be to ensure that there is sufficient time for manufacturers to review and implement the changes.
Changes set out in the new RTS include:
- New methodologies for calculating performance scenarios and amendments to the presentation of these scenarios;
- Revised summary cost indicators and changes to the content and presentation of information on the costs of PRIIPs;
- A modified methodology for calculating transaction costs; and
- Modified rules for PRIIPs that offer a range of options for investment.
In addition to being able to facilitate these changes, manufacturers will now also have to digest and subsequently satisfy the new Annex VIII requirements on the ‘content and presentation of past performance information’ which will be mandatory for certain types of PRIIPs (UCITS, AIFS and insurance-based investment products).
With regards to UCITS and the practical uncertainties surrounding the production of both a UCITS KIID and a PRIIPS KID, the delegated regulation accompanies amendments to the UCITS Directive (Directive 2009/65/EC ). The amendments mean that as of 1 July 2022, retail investors will not receive two pre-contractual disclosure documents, a KIID and a KID. The delegated regulations state that if a UCITS “draw up, provide, revise and translate KIDs, the requirements on ‘key investor information’ as set out in Articles 78 to 82, and Article 94 of that [UCITS] Directive are consequently satisfied.”
The European Parliament and Council will now review the new RTS and if there are no objections it will be published in the Official Journal of the European Union and enter into force twenty days later.