PRIIPs Reporting Requirements
PRIIPs impose detailed obligations on producers of PRIIPs (individuals offering or concluding contracts for PRIIPs with retail investors, such as underwriters or downstream brokers). Key PRIIPS reporting requirements include KID publication. A KID is a three-page summary detailing the product, along with a description of its nature, main features, and projected maximum loss. The KID must be produced and published on the website of PRIIP manufacturers so that retail investors can access them. KIDs must be published in good time. Retail investors must be provided with KIDs by PRIIP sellers before they are bound by any contract related to that PRIIP.
U.K. Proposes Changes to PRIIPs TS
The U.K. Financial Conduct Authority FCA recently announced that it would be amending the existing PRIIP reporting requirements. A KID must now contain “performance information” instead of referring to “performance scenarios” as in the PRIIPs Regulation. FCA proposes to allow KID performance scenarios to be removed entirely from UK PRIIPs TS due to its new legislative authority. The U.K. PRIIPs TS would replace the performance scenarios with new reporting requirements, including The facts about their underlying assets, how they calculate returns, and how they calculate their return; inverse correlation between PRIIP returns and the asset or reference value underlying the investment; performance factors that may influence the future; performance and volatility in comparison to the most relevant benchmark, target, target, or proxy and; a summary of the product’s best, worst, and most likely outcomes.
EU Commission’s Amendments
It was announced on July 15th that the European Commission had adopted a proposal (COM(2021) 397) modifying the PRIIPs Regulation (1286/2014) as regards extensions to the transitional plans for management and investment companies and advisers and sellers of UCITS and non-UCITS. Further consultation is underway, ending September 9th, 2021, for more changes on PRIIPs Regulation. There is a proposal to extend the temporary exemption for UCITS from submitting a key investor information document under PRIIPs. The exemption applies to managers, investment firms, and persons who advise on or sell UCITS. PRIIPs aims to enhance investor protection standards for retail clientele and increase market transparency. As companies plan to meet regulations, compliance strategies must consider the current and future changes to reporting requirements.
