On 30 June 2016, the European Commission adopted a Delegated Act supplementing the EU Regulation on key information documents ("KID") for packaged retail and insurance-based investment products ("PRIIPs") (the "PRIIPs Regulation"). The Delegated Act introduces regulatory technical standards ("RTS") specifying the content and underlying methodology of the KID that will have to be provided to retail investors when they buy certain investment products.
The PRIIPs Regulation introduces a pan-European standardised precontractual disclosure document requirement for manufacturers of PRIIPs to assist retail investors in understanding the key features and risks of retail investment products so that they can make a more informed decision on these investment products.
All PRIIPs manufacturers and those persons advising on or selling PRIIPs must comply with the PRIIPs Regulation by 31 December 2016.
The RTS in Context
The RTS specify the exact contents of the KID. The KID must outline the product's aims, how risky it is, when investors can get their money back, how much it costs and its expected returns. All of this information must be set out in a standard way, irrespective of the type of investment product.
The RTS address the content and presentation of the KID and include:
a mandatory template for the KID, covering the texts and layout to be used; a methodology for the assignment of each PRIIP to one of the seven classes in the summary risk indicator and narrative explanations to be included; details on performance scenario and a...