On November 17, 2014, the three European Supervisory Authorities, the European Securities and Markets Authority, the European Banking Authority and the European Insurance and Occupational Pensions Authority, released a discussion paper in relation to Key Information Document for PRIIPS. This follows the adoption by the Council of the EU of the final form of the PRIIPS regulation earlier in November. The regulation requires the provision of a clear and succinct summary document, containing key information for investors on the product and the issuer, whenever selling a packaged investment product or insurance-based investment product to retail investors. The regulation requires a prescribed format and content for the KID, in order to assist retail investors in analysing different types of PRIIPs products. The PRIIPS regulation will take full effect early in 2017, but in the meantime, it envisages various technical standards being drafted by the three ESAs, for adoption as delegated acts by the European Commission.

The discussion paper has been published in relation to various specific points under the PRIIPs regulation, namely the details of the presentation and content of each element of the required KID content, the methodology underpinning the presentation of risk and reward, such as the risk indicator and performance scenarios, and the methodology for calculation of costs, including the specification of summary indicators. The risk and reward section of the discussion paper focuses on issues such as defining risk and reward, defining market, credit and liquidity risk and the different possible measures and ways of presenting each type of risk. These include various possible presentations of a summary risk indicator in pictorial form. In relation to the costs section, the paper discusses different types of costs, and the scenarios in which they can occur in relation to different types of PRIIP. It also explores different possible options for presenting costs, including different visual way of presenting a summary costs indicator.

In addition to risk and reward and costs, the paper also discusses other elements of the required content of a KID, including items such as the required comprehension alert. The paper provides further details on sections such as a description of what a product is, what happens if the PRIIP manufacturer is unable to pay out, how long the product should be held for and whether early redemption is possible, and how complaints can be made. It also discusses other requirements, including the need for a regular review of the information contained in the KID and possible consequent revision and re-publication of the KID, as well as the timing of delivery of the KID to the retail investor.

The three ESAs invite comments to be submitted by February 17, 2015, and they will use the feedback on the discussion paper to prepare draft regulatory technical standards. They expect to publish a consultation on these technical standards in the autumn of 2015. However, before this, there will be a consumer testing exercise organised by the European Commission to assist the ESAs in developing the standards.