PRIIPs regulation has now been onshored

Jun 2, 2021 12:00:00 AM

What has happened?

In its Regulatory Initiatives Grid published in May 2021, the FCA confirmed that the Packaged Retail and Insurance-Based Investments Products Regulation (the PRIIPs Regulation) has now been onshored and prescribes that a Key Information Document (a KID) must be given to an investor before and after the sale of any PRIIPs product.

What do you need to do?

The FCA had previously flagged concerns with the Regulation in its July 2018 Call for Input and its February 2019 Feedback Statement. It is now consulting on targeted changes to the Regulatory Technical Standards (RTS) within the PRIIPs Regulation to rectify concerns that had been previously flagged.

The EU PRIIPs Regulation stipulates a number of mandatory features of a KID, including “appropriate performance scenarios, and the assumptions made to produce them”. The methodology prescribed by the EU PRIIPs Regulation regime, which relies on past performance to produce these performance scenarios, was widely criticised for producing misleading results across a wide range of products. Within weeks of the EU PRIIPs Regulation coming into effect, the FCA made a public statement seeking to mitigate these criticisms by allowing firms to provide additional explanatory materials to avoid KIDs misleading potential investors.

The Financial Services Act 2021 seeks to address this issue in the context of Article 8 of the UK PRIIPs regime by replacing this provision with a requirement that the KID contains simply “information on performance”. The FCA will now be able to make rules clarifying what performance information should be provided in the UK KID.

How can we help you?

If you’d like to know more about how we can help you with your PRIIIPs arrangements, or any other regulatory compliance issues, our expert team is here to help.

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