The new PRIIPs RTS are finally agreed by the ESAs

On 20 July 2020, the European Supervisory Authorities (ESAs) published the outcome of the packaged retail investment and insurance products (PRIIPs) review. Despite the efforts made in the last 18 months, they have up to now failed to agree on the final text. This was mainly because of the excessively optimistic performance projections (as exposed during the COVID-19 pandemic crisis) and the cost disclosures, which are deemed potentially misleading.

In an effort to keep control of the regulatory process and provide clarity before the UCITS exemption ends at the end of 2021, The European Commission recently urged the ESAs to agree on the PRIIPs regulatory technical standards (RTS) by the end of January.

On 3 February 2021, the ESAs announced that they have reached a consensus on the PRIIPs amendments.

In a nutshell, there are no content changes to the draft RTS as published in June 2020. They will now be submitted to the Commission for formal adoption, and thereafter to the European Parliament and Council. Therefore, the adoption of those RTS is still not final.

Timing is critical for all players in the financial industry, as this now leaves very little time to implement this PRIIPs overhaul.

This is particularly true for asset managers, who will need to undergo a substantial transition from the UCITS key information documents (KIDs) to the new PRIIPs version. In this regard, the investment fund industry is still lobbying for the UCITS exemption to be extended for a further 12 months, i.e., until January 2023. An amendment to the UCITS Directive is also expected in order to avoid the PRIIPs KIDs and the UCITS KIIDs coexisting, but this is yet to be confirmed.

What is in it for my institution?

Upon adoption by the European Parliament and the European Council, the new RTS is an important milestone for producers of PRIIPs KID, as this document will pave the way for the new format that will need to be applied.

This has an impact on PRIIPs KIID production for all concerned stakeholders, ManCos, AIFMs and insurers, as well as other product manufacturers like banks or asset managers for structured products for example.

How can Deloitte help?

At Deloitte, our UCITS and PRIIPs KI(I)Ds analytics and assembly services are designed to help you smoothly cope with the upcoming regulation change and to cope with large volume of documents. Our specialist team is also ready to assist clients to efficiently transit to the new KIDs.

Please reach out to us if you would like to discuss and plan how to best manage the impacts of this PRIIPs review.

With our Regulatory Watch service, Deloitte helps you stay on top of regulatory news while preparing your organization to address future regulatory developments.

Contacts

Subject matter specialists

Regulatory Watch Kaleidoscope service