The European Supervisory Authorities (the ESAs, made up of ESMA, EBA and EIOPA), have published a series of letters between them and the European Commission (EC), over the proposed ending of the exemption for UCITS KIIDs at the end of 2019.
On 11 September, the Association of Investment Companies (AIC) published a report detailing the extent of misleading output, particularly in the risk and reward sections, of PRIIPs KIDs.
Nobody denies the value of a short document with key information for investors before they commit to a fund or product. But criticism of the calculations used in PRIIPs KIDs has been pretty constant since even before they hit the streets in January and has hopefully reached a level that can’t be ignored by the European Commission or the European Supervisory Authorities (ESAs).
First, we need to clarify that the IDD covers the distribution of two distinct types of insurance – non-life (general) insurance and Insurance-Based Investment Products (IBIPs).
Back in what now feels almost like pre-history, the European Working Group (EWG) came together to provide a standardised reporting template to deliver the data from asset managers to insurance companies for their Solvency II reporting and the Tri-Partite Template (TPT) was born.
The FCA has had a busy time so far in April, with the publication of, among other things, Policy Statement PS18/8 on final AMMS remedies, Consultation Paper CP18/9 on further proposed AMMS remedies and Occasional Paper 32 on the disclosure of fund charges.
Pre-sale Key Information Documents (KIDs) are now required for all Packaged Retail and Insurance-based Investment Products (PRIIPs) that don’t publish UCITS KIIDs. Following heavy criticism about misleading performance scenarios, the FCA says firms can now produce “explanatory materials to put the calculation in context”. Advisers can also “consider how to address this, for example by providing additional explanation as part of their communications with clients” without diminishing or contradicting the content of the KID.
Mikkel Bates, FE regulatory correspondent discusses whether there could be any changes to the MiFID II regulation from a client communication perspective, post Brexit.
The day has now arrived and KIDs are required for sales of all PRIIPs to retail customers. Many of those involved to date may finally be exhaling after holding their breath for the last few months ahead of the deadline over the festive period.
But don’t think it’s all over just yet!
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