PRIIPS Regulation - Update

On September 14th 2016, the European Parliament rejected the regulatory technical standards approved by the European Commission in June 2016 on the presentation and content of the KID (the “RTS”).  The RTS had previously been rejected by the Economic and Monetary Affairs Committee (the “ECON”) on September 1st 2016. The RTS supplement the provisions of Regulation (EU) No 1286/2014 (the “PRIIPS Regulation”) on key information documents for packaged retail and insurance-based investment products.

ECON considered that the Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA the “ESAs”) and the European Commission have not taken into account their considerations relating to the protection of retail investors. The European Parliament and ECON would prefer that the PRIIPS Regulation does not enter into force as foreseen on December 31st 2016 and its effectiveness is postponed until an agreement is reached on the RTS. ALFI mentioned in their press release of September 16th 2016 their agreement with this view.

"However, to postpone the entering into force of the PRIIPs Regulation, a new regulation should be approved by the European Commission."

If a new regulation is not approved to postpone the entry into force of the PRIIPs Regulation, by January 1st 2017, PRIIP manufacturers must prepare and publish KIDs for each PRIIP they manufacture and from that date, the entities selling or advising on PRIIPs (banks, insurance or securities firms) must provide KIDs to retail investors.