On 3 July 2012 the European Commission presented their legislative proposals for a regulation on key information documents for packaged retail investment products (PRIPs).


The PRIPs proposal aims to improve transparency in the investment market for retail investors. For this, the consumers should be informed in a short and standardized format that is easy to understand: the ``Key Information Document`` (KID). 


The Commission seeks to help retail investors to make a more informed decision on whether an investment is right for them or not and be able to compare investment products with each other.


At the same time, the proposal aims to ensure a level playing field between different investment product manufacturers and those selling such products.

Key issues

All ‘investment product manufacturers’ regardless of sector (e.g. credit institutions, investment firms, fund managers, insurance undertakings or issuers of securities) will have to prepare and maintain a KID for each investment product.

  • Whoever sells an investment product to a retail investor has the obligation to provide him/her with the KID.
  • Definition of ‘investment product’ to include all investment funds, retail structured products and investments packaged as insurance policies.
  • Only investment products that are sold to retail investors will be covered; products sold to professional investors are excluded.
  • All KIDs should have a strongly standardised ‘look and feel’ to facilitate easy comparison and comprehension by retail investors. KIDs should be accurate, fair, clear, short, concise and written in non-technical, jargon-free language.
  • Each KID will have to follow a common standard as regards structure, content and presentation and will need to provide consumers with information on the identity of the product and its manufacturer, the product’s main nature and features, its risk and reward profile, costs associated with the investment in that product and past performance as appropriate.
  • The KID will serve as a stand-alone document in the sense that retail investors should not be required to read other documents to be able to understand the key features of the investment product and make an informed investment decision, and it should be clearly distinct from marketing materials.
  • The manufacturer will be held liable for any loss suffered by a retail investor due to the use of a PRIPs KID which does not comply with the requirements of the proposed Regulation.
  • The manufacturer has the burden of proving that the KID was drawn up in compliance with the Regulation.
  • Transitional provisions allow UCITS to continue to use the UCITS-KIID in accordance with the UCITS Directive for five years from the entry into force of PRIPs.
  • Rules relating to complaints, redress and sanctions. National authorities will be given intervention powers when KIDs fail to comply with the Regulation.


Impact analysis

  • Manufacturers will need to conduct a gap analysis and assess which products are in the scope of the Regulation.
  • Taking into account the IT and HR aspects of these tasks, manufacturers will then have to determine whether they want to prepare and maintain the KIDs themselves or outsource these tasks.
  • Implementation of effective production and maintenance procedures if manufacturers decide to keep the task in-house.
  • Implementation of effective procedures to ensure data quality and continuous data transfer to third party if manufacturers decide to outsource the tasks.
  • Rationalisation of product range to avoid preparation and maintenance of multiple KIDs for similar products.
  • Increased competition across retail investment products as investors will be in a better position to compare the different products and choose the product that suits their specific investment interest.
  • Implementation of procedures to allow continuous access of distributors to up-to-date KIDs.


Next steps

The proposal takes the form of a Regulation and will therefore not require implementation into national law but will be directly applicable in all Member States shortly after it is adopted. The Regulation will also be supported by detailed delegated acts.

The Commission’s proposal will now go to the European Parliament and the Council for their consideration under the co-decision procedure. The Commission expects the final Regulation to be in place by the end of 2014.




Investment Management contacts

brian clavin, partner

Brian Clavin

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Partner & Head of Investment Management

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