The European Commission has now published its final proposal for a Regulation on mandatory pre-sale disclosures for Packaged Retail Investment Products (PRIPs). The Regulation aims to close gaps and inconsistencies in current rules across Europe by introducing uniform rules on product disclosures. The Commission last consulted on these reforms in January 2010, so the draft Regulation has been a long time coming.
This briefing summarises the new PRIPs Regulation and considers the interplay with disclosures required by the RDR and revised MiFID. Insurance intermediaries may also be interested in our briefing on proposed revisions to the Insurance Mediation Directive.
This Regulation is likely to considerably increase the costs and resource already being expended in implementing related rules under the FSA's RDR and the Commission's review of MiFID (MiFID II). Estimated industry compliance costs are €171 million initially and €14 million per year thereafter.
- Standardised form of disclosures will be required for a broad range of retail investment products
- A lack of clarity on which products come within scope may cause difficulties for firms
- Product providers, or those who substantively change the risk or costs structure of the product, will be responsible for producing the Key Information Document (KID) – production can be delegated, but responsibility cannot be assigned
- PRIPs KID is based on UCITS KIID and so will already be familiar to some firms
- Regulation does not conflict with RDR, but RDR and MiFID II required disclosures may do so