• Service: Infrastructure, Legal Services, Legislative and Regulatory
  • Industry: Financial Services, Fund Management
  • Type: Business and industry issue, Publication series
  • Date: 8/28/2012


Ravi Beegun

+352 22 51 51 - 6248


Charles Muller


Tel. +352 22 51 51 - 7950


Dee Ruddy


Tel. +352 22 51 51 - 7369


Gabrielle Jaminon


Tel. +352 22 51 51 - 7635

Packaged Retail and Insurance based Investment Products (PRIIPs) 

On 30 December 2014, the PRIIPs Regulation entered into force. It aims at improving investor protection by introducing a mandatory key information document (KIDs) for banking, insurance, structured securities and fund products that target the retail segment. The long awaited Packaged Retail and Insurance based Investment Products (PRIIPs) Regulation is expected to apply directly in all Member States from 31 December 2016 and is complementary to MiFID II and IMD.


The objective of the Regulation is twofold: to ensure that retail investors are able to understand a product and its associated risks, and to facilitate the comparison between products to enable investors to make an informed investment decision, as well as to introduce a level playing field between the different product manufacturers and sellers through harmonization of the product disclosure rules.



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Key features


  • All “investment product manufacturers” regardless of their sector, e.g. fund managers, credit institutions, investment firms, insurance undertakings or issuers of structured securities, will need to produce and maintain a KID for each of their in-scope products (PRIIPs).
  • The KID needs to be drawn up and published on the manufacturer’s website before placing the retail investment product into the market, and must be kept up-to-date.
  • The KID shall enable retail investors to understand the key features, risks, costs, potential gains and losses of the PRIIP, and to facilitate comparison with other products.
  • The KID should be accurate, fair, clear, short and concise, and written in a non-technical, jargon-free languages.
  • It should have a maximum length of three A4-pages when printed and be translated in the languages of the Member States where the PRIIPs will be distributed.
  • It shall be a stand-alone document and shall not contain cross-references to marketing material.
  • Also persons advising on or selling PRIIPs are in-scope, and whoever sells an investment product to a retail investor has the obligation to provide him/her with the KID in due time before a binding agreement is made.




Product scope


To assess whether an investment product falls within the scope of the Regulation, two elements are to be considered:


  1. “Packaged retail Investment products” (PRIIPs) are defined as investments where, regardless of the legal form of the investment, “the amount repayable to the investor is subject to fluctuations because of exposure to reference values or to the performance of one or more assets which are not directly purchased by the investor”. This concept excludes direct holdings and presumes that a form of “packaging”, “wrapping” or “bundling together assets” exists.
  2. “Insurance-based investment products” are defined as “insurance products which offer a maturity or surrender value and where that maturity or surrender value is wholly or partially exposed, directly or indirectly, to market fluctuations”.

Only investment products sold to retail investors are covered, whereas products sold to professional investors are excluded.

The following instruments are considered to be in-scope:


  • Investment funds (UCITS and alternative funds will benefit from a 5 years transitional period)
  • Insurance policies with an investment element
  • Structured deposits


Not in-scope are


  • Non-life insurance products
  • Life insurance contract where the benefits are payable only on death or incapacity
  • Deposits other than structured deposits
  • Most types of securities
  • Pension products recognized by national law as having the primary objective of providing the investor with income in retirement
  • Officially recognized occupational pension schemes
  • Individual retirement products for which an employer’s financial contribution is required by national law. 




Format & content of the KID


Each KID will have to follow a common standard as regards structure, content and presentation and shall contain inter alia

An introductory statement with


  • a title “Key Information Document”,
  • the name of the PRIIP,
  • the identity and contact details of the PRIIP manufacturer,
  • information about the competent authority,
  • the date of the document,
  • where applicable, a comprehension alert: “You are about to purchase a product that is not simple and may be difficult to understand.”


Specific sections are required the content of which is detailed in the Regulation:


  • What is the product?
  • What are the risks and what could I get in return?
  • What happens if the PRIIP manufacturer is unable to pay out?
  • What are the costs?
  • How long should I hold it and can I take money out early?
  • How can I complain?
  • Other relevant information.




Rules relating to complaints, redress & sanctions


Member States must lay down rules to establish appropriate administrative sanctions and measures. Upon breach of the provisions of the Regulation, national competent authorities should have the power to impose adequate penalties.

Administrative sanctions include:


  • the prohibition of the marketing of the PRIIP;
  • the suspension of the marketing of the PRIIP;
  • a public warning.


Administrative pecuniary sanctions include:


  • for legal entities: an amount of up to EUR 5 million or up to 3% of annual turnover, or up to twice the amount of profits gained or losses avoided because of the breach;
  • for natural persons: an amount of up to EUR 700 000 or up to twice the amount of the profits gained or losses avoided because of the breach.


Firms failing to comply will come under scrutiny due to an increased disclosure to the public. 




Regulatory developments


17 November 2014 - ESAs issue a joint Discussion Paper on KID for PRIIPs


The European Supervisory Authorities (ESAs (PDF, 1.38 MB)), meaning the European Securities and Market Authority (ESMA), the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA), have issued a Discussion Paper to gather views from the industry in order to draft the Regulatory Technical Standards on the KID content and presentation rules, the way the KID shall be reviewed, revised and republished, the meaning of “provision in good time” of the KID in the context of the Regulation.


KID content and presentation rules

The main concern is how and what to disclose to ensure that the investors will be able to easily compare the different products offered to them. Topics addressed by the discussion paper are:


Risks, performance and costs sections with discussions on:


  • Identification of potential investors’ questions that should be addressed by the KID
  • Quantification of the risks
  • Aggregation of costs
  • Presentation options


Similar discussions address the performance section.


The “other sectionsof the KID, with main discussion points relating to the clarity of the identification criteria for “non-simple products” and the product classification.


The specific case of “products offering many options for which a single stand-alone KID may not be possible”, which similarly focuses on identification and presentation issues.


More generally, the challenge lies in how and what to disclose to ensure that the investors will be able to easily compare the different products offered to them.


Review, Revision and Republication

In this respect, the ESAs intend to adapt the UCITS KIID’s measures to the PRIIPs KID as far as possible.


Meaning of “provision in good time” of the KID

The intention of the ESAs is to refer the MIFID II criteria such as:


  • The urgency of the situation from the perspective of the retail investor;
  • The time necessary for the specific retail investor to read and understand the KID;
  • The complexity of the investment;
  • The familiarity of the investment for the retail investor.


General aspects of the KID


  • The ESAs estimate that it would be difficult to establish RTS to set requirements on ‘plain language, so that they consider the establishment of a ‘best practice guide’ or similar tool.
  • For the purpose of reaching a consistent ‘look and feel’, the ESAs will probably prepare templates but will as much as possible privilege flexibility for the manufacturers producing the KID for their PRIIPs.
  • The ESAs consider the option to reflect the payment structure in the KID to distinguish, whether the PRIIP is offered with regular payment or on a single payment basis.




How can KPMG help you? We can provide assistance in ...


  • Evaluating whether your products are in-scope
  • Developing and/or reviewing your KIDs in terms of compliance
  • Implementing necessary procedures
  • Keeping you up-to-date via our Regulatory Scout
  • All legal and regulatory texts are available in our Regulatory Scout Library




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