The Joint Committee of the European Supervisory Authorities (ESAs) has published a letter to the European Commission outlining its concerns about key information documents (KIDs) for packaged retail and insurance-based investment products (PRIIPs).
ESMA’s key concerns
It is unsatisfactory that retail investors will receive both the PRIIPs KID and a KID under the UCITS Directive from 1 January 2020. The Joint Committee believes this October 2018. Key
- undermines the aims of the PRIIPs Regulation.
- Rather than helping investors make an informed decision, overlapping disclosure documents could in fact deter investors from using them.
- There is a risk that the information on the PRIIPs KID and the UCITS KID will be inconsistent due to technical differences in the methodologies used for information on risks, performance and costs. For example, the UCITS synthetic risk reward indicator and the PRIIPs summary risk indicator will result in different risk indicators for a material number of PRIIPs.
ESMA’s suggested solutions
- There is a need for legislative change to avoid duplicate information requirements from 1 January 2020.
- In Q4 of 2018, the Joint Committee will conduct a targeted review of the PRIIPs Commission Delegated Regulation 2017/653, including a public consultation. It intends to conclude the review as soon as possible and to submit proposed amendments the European Commission in Q1 of 2019.
- The Joint Committee expects to examine issues relating to performance scenarios and other specific issues addressed in Q&As published by the ESAs.