European Commission refuses to delay PRIIPs regulation
The deadline is only 6 months away. Are you ready to comply?
Banking alert | 30 May 2016 | Deadline for PRIIPs Regulation unchanged for year end
The European Commission responded negatively to industry calls to delay the implementation of the PRIIPs Regulation, leaving the 31 December 2016 deadline unchanged.
Industry lobbying for delay
Since the Joint European Supervisory Authorities (ESAs) published their final draft Regulatory Technical Standards (RTS) on PRIIPs on 7 April, numerous European financial associations, including Insurance Europe, lobbied heavily on behalf of industry to delay the implementation of KIDs for PRIIPs.
Arguments for delaying the implementation focused primarily on the fact that the 31 December 2016 deadline is unrealistic to meet given the significant operational challenges. In addition, Insurance Europe argues that the current draft RTS would mislead consumers owing to design faults and, furthermore, that the insurance industry needs sufficient time to programme, test and launch the KID correctly.
Response from the European Commission
The European Commission responded negatively to industry calls to delay the implementation of the PRIIPs regulation, leaving the 31 December 2016 deadline unchanged. The letter of response from Commissioner Jonathan Hill included the following points:
- The RTS are expected to be adopted before the summer to allow industry to receive legal certainty on the final format for the KID;
- There are no transitional provisions for existing PRIIPs i.e. both new and existing products offered to retail investors must be accompanied by a KID from 1 January 2017;
- Insurers offering multi-option insurance products (as in the case of unit-linked products) are required to provide a KID;
- A derivative generally falls under the definition of a PRIIP and therefore, a KID is required. For certain derivatives, a simplified KID will be provided for in the RTS;
- The PRIIPS Regulation imposes an obligation (i) on manufacturers to draw up the KID in accordance with the prescribed format and (ii) on entities advising on and/or selling a PRIIP to retail investors to provide the KID. These two obligations are triggered when a PRIIP is offered or sold to retail investors within the EU;
- The Commission will host, together with the European Supervisory Authorities, a workshop open to all stakeholders, which will allow questions about the new rules to be posed.
How we can help
Our team of banking experts has the skills, credentials and experience to prepare you for compliance with the KIDs for PRIIPs Regulation. Our service offerings include the following:
- KID Production Solution. Outsourcing the production of the KID will free up time to focus on core value-adding business activities. You have the option of outsourcing the production of the KID in full or specific sections which may be more challenging, such as the risk calculations.
- KID Review Solution. As an alternative to outsourcing the KID production, you may wish to obtain assurance over the KIDs you produce. Our review solution involves a gap analysis and validation of calculations.
- Operational and process review – Internal audit procedures. Given the information required will likely come from different sources, controls are key to ensure accuracy.
- Training. Producing a KID in line with the Regulation may require training specific staff members, including members of the Board. We have experience in providing training on areas of risk and regulation.
Our PRIIPs Diagnosis Workshop is an effective way of kick-starting your transformation. In our workshops we will work with you to assess which of your current product offerings fall within the scope of this Regulation.
Should you be interested in any of our solutions, including organising a workshop with our team, please do not hesitate to contact us.