On 26 June 2013, the Permanent Representatives Committee of the Council of the European Union agreed, on behalf of the Council, its position on a draft regulation aimed at improving market transparency for retail investors.  The proposal forms part of a legislative package dedicated to strengthening consumer trust in financial markets and sets out to ensure that retail investors always receive the information they need to take informed decisions. 

The draft regulation covers packaged retail investment products (PRIPs), specifically investment funds, structured deposits and life insurance policies with an investment element.  It requires key information documents to be drawn up for PRIPs and lays down uniform rules on the format and content of such documents and on their provision to retail investors.  The directly applicable regulation should ensure that all those advising on or selling PRIPs are subject to uniform requirements in relation to the provision of the key information document to retail investors.  It is provided in the draft regulation that given the difficulties that many retail investors have in understanding specialist financial terminology, particular attention should be paid to the vocabulary and style of writing used in the key information document and retail investors should be able to understand the key information document on its own without referring to other non-marketing information.  Such documents should only contain relevant information such as the nature and features of the product, whether it is possible to lose capital, the costs and risk profile of the product and relevant performance information.  Format, presentation and content should be calibrated to maximise understanding of information and to allow retail investors to compare different PRIPs.  The draft regulation further provides that retail investors should also have an effective right of redress under the applicable national law.

Persons advising on or selling PRIPs will be required to provide the key information document in good time before any transaction is concluded.  Where the transaction takes place by means of distance communication, the key information document may be provided immediately after the transaction is concluded provided it is not possible to provide it in advance and the retail investor has consented.

The requirements under the draft regulation will become applicable two years after entry into force of the regulation.  UCITS will only become subject to the regulation after five years, given that they are already subject to key investor information requirements under the UCITS Directive.