The European Commission is proposing a one year extension to the application date of the Packaged Retail and Insurance-based Investment products ("PRIIPs") Regulation 1286/2014.
The PRIIPs Regulation seeks to enhance investor protection and rebuild consumer trust in the financial services industry by increasing transparency in the retail investment market. In order to fulfil this objective, it requires fund managers, investment firms, banks, insurance undertakings and other PRIIPs manufacturers to draw up a Key Information Document (“KID”) and to comply with a uniform set of product disclosure requirements. See our related briefing here.
The PRIIPs Regulation provides for the Commission to adopt delegated measures based on regulatory technical standards (“RTS”) prepared by the European Supervisory Authorities. The Delegated Regulation supplementing the PRIIPs Regulation on product intervention was published in the EU’s Official Journal on 29 October 2016 (here).
The Commission published a draft Delegated Regulation laying down RTS with regard to the presentation, content, review and revision of the KID and the conditions for fulfilling the requirement to provide a KID on 30 June 2016. However, in September, the European Parliament rejected this draft Delegated Regulation. The European Parliament and a large majority of Member States also called for a postponement in the date of entry into application of the PRIIPs Regulation.
The Commission’s Proposal for a Regulation amending the PRIIPs Regulation will defer the application date of the PRIIPs Regulation by twelve months meaning that it will not enter into force until 1 January 2018.
While the proposal must be approved by the Council of the EU and the European Parliament and published in the Official Journal before entering into force, we do not anticipate any substantive problems in this regard. However, it remains to be seen whether the proposed Regulation will enter into force in time to amend the current PRIIPs Regulation in order to prevent it applying from 31 December 2016, as the timing seems very tight. In any event, the Commission’s proposal is likely to be widely welcomed by PRIIPs manufacturers who can look forward to having more time to prepare for the application of the new rules.