Commission adopts improved disclosure rules for retail investment products

The European Commission has today adopted new and improved rules in the area of retail investment. A Delegated Regulation adopted today sets out what should be included in the so-called “PRIIPs KID” (the Packaged Retail Investment and Insurance Product (PRIIPs) Regulation Key Information Document). The PRIIPs KID is a document private investors receive when they purchase certain investment products. It summarises and explains the key elements of each investment product – especially the costs, risks, and potential returns – so that private investors can better understand the product they are buying, and compare it with other products. The PRIIPs KID will now be the only document of its kind given to private investors across major retail investment products types, including investment funds, life-insurance investment products, and structured products. Mairead McGuinness, EU Commissioner responsible for Financial services, financial stability and Capital Markets Union said, “Current practice where retail investors receive two different types of retail investment information sheets, depending on whether they are buying an investment fund product or another type of retail investment, can make it difficult for investors to compare products, especially on risks or costs. For this reason, we are simplifying the rules to bring them together under one umbrella: the PRIIPs Key Information Document.” Today’s new rules will now be subject to scrutiny by the European Parliament and the Council. They are scheduled to apply from 1 July 2022. This is intended to coincide with targeted quick-fix amendments of the PRIIPs Regulation and the UCITS Directive, which will end the obligation for retail investment funds to publish UCITS KIIDs as of 1 July 2022, to avoid duplicate pre-contractual disclosures. The Key Information Document is available here.