SMSG has expressed its grave concern that the Key Information Documents (KIDs) to be issued in the context of the PRIIPS regulation will not include historical data in explaining performance measures to investors. In an Opinion Paper published on 5 February, SMSG cautions that to exclude historical data would be seriously detrimental to retail investors and their ability to understand and compare PRIIPS.

The European Supervisory Authorities (ESAs) are charged with producing the drafts of the KIDs for the Commission to approve as level 2 regulatory technical standards (RTS). SMSG believes that they have misunderstood the legislature’s intention under the PRIIPs Regulation. The ESAs believe that if there is not a direct reference to historical data on past performance, it is not mandated to include it in the KID. However, SMSG does not believe that is correct – in its view, the EU legislature may wish to remove an emphasis on past performance that could lead to retail investors’ over reliance on historic data, but it did not intend for historical data not to be included as a relevant factor, along with a broad scope of other factors when considering performance measures of an investment. The Opinion goes on to set out the benefits of including historical data in the performance measures (e.g. for any given PRIIP, the future may hold many different outcomes but history provides only one). The SMSG urges the European Parliament to revisit the issue and make it clear to ESAs that it was not intended that the KID exclude historical data entirely.

A link to the Opinion Paper is here.