PRIIPs And Funds – What You Need To Know

Author:Mr Conor Durkin, Liane Müllers and Sarah Cloonan
Profession:Mason Hayes & Curran

From 1 January 2018, Key Information Documents (KIDs) will be required when a 'Packaged Retail and Insurance-Based Investment Product' (PRIIP) is offered to retail investors. PRIIPs include investment products such as investment funds, structured products, structured deposits, instruments issued by special purpose vehicles and life insurance policies with an investment element.

Who needs to consider producing a KID?

All manufacturers and financial intermediaries that distribute PRIIPs to retail investors fall within the scope of the EU Regulation on Packaged Retail and Insurance-Based Investment Products (EU 1286/2014) (the Regulation). These include fund managers, credit institutions and investment firms. A retail investor includes any investor who is deemed not to be a MiFID professional investor possessing the experience, knowledge and expertise to make their own investment decisions and to properly assess the risks.

Alternative Investment Funds (AIFs) aimed at retail investors must comply with the requirement to produce a KID.

Who is exempt?

In particular, investment funds offered solely to institutional investors will be exempt from the scope of the Regulation. Individual and occupational pension products, recognised under national law as having the primary purpose of providing the investor with an income in retirement, are also excluded.

What do I need to do if the Regulation applies to me?

The Regulation introduces an obligation on the PRIIP manufacturer to produce a KID when investment products are sold to retail investors. The principle behind the KID is that retail investors should have access to certain pre-contractual information that is accurate, fair, clear and not misleading. The KID should aid the retail investor in its consideration of the PRIIP so as to make an informed investment decision.

The KID must be a stand-alone document and cannot exceed three A4-sized pages. The following information must be set out in a KID:

General information on the relevant PRIIP including its name, identity and contact details of the PRIIP manufacturer, the competent...

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