PRIIPs

A comprehensive package of proposals intended to address various issues flagged in relation to the PRIIPs KID is expected during the first half of 2020. The proposals will take the form of a Final Report by the Joint Committee of the ESAs, including a draft RTS amending PRIIPs Delegated Regulation 2017/653, and will take into account feedback received from respondents to the ESAs’ consultation paper and the Commission-led consumer testing exercise launched towards the end of last year.

Of particular interest to manufacturers of retail structured products will be the proposed changes to:

• the methodology for calculating and presenting performance scenarios, including a proposal by the ESAs to include illustrative examples in addition to or instead of performance scenarios in structured products KIDs; and
• the costs disclosure rules, aimed at simplifying some of the present concepts for investors and improving compatibility with MiFID II costs and charges disclosure.

Assuming the Commission endorses the draft RTS in Q2 2020 (which is not a certainty – the Commission has indicated that it will reject any draft that exceeds the scope of the PRIIPs Regulation) and the draft RTS passes through the usual co-legislators’ scrutiny process, the amendments are not expected to apply until 2021 at the earliest.

Separately, later this year the Commission will publish the results of its wider PRIIPs review as mandated by Article 33 of the PRIIPs Regulation, under which it will look at (among other things) the interplay with other pieces of legislation such as the Prospectus Regulation and MiFID II/R and consider any Level 1 changes proposed by the ESAs in their Final Report.