The European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) published today their technical advice to the European Commission on the review of the PRIIPs Regulation.
The
advice will serve as input for developing the Commission’s Retail
Investment Strategy.
Taking into account the details provided by the European Commission
in January 2021 on their intended approach to this review of the PRIIPs
Regulation, the ESAs recommend significant changes to the PRIIPs
Regulation and encourage the Commission to consider a broad review of
the PRIIPs framework as well as to undertake appropriate consumer
testing before formulating proposals for changes. The recommended
changes aim to improve the presentation of information provided to
consumers and to make it easier for them to compare different products.
The advice addresses all the issues requested by the Commission,
including how to better adapt the key information document (KID) to the
digital age and whether to extend the scope of the Regulation to other
financial products. Additionally, it presents the ESAs’ recommendations
on a range of other issues where analysis has shown that changes are
needed to achieve optimal outcomes for retail investors. In particular,
the ESAs are of the opinion that the KID would prove more useful to
retail investors if presented in a much simpler and more user-friendly
format.
In more detail, the ESAs recommend:
- harnessing the opportunities of digital disclosure, such as by allowing information to be presented in a “layered” format;
- not extending the scope to additional financial products at this stage, but further specifying the existing scope;
- allowing different approaches for different types of products where
this is necessary to ensure the appropriate understanding of retail
investors;
- allowing more flexibility on the information provided in the
performance section of the KID including the indication of past
performance;
- changing the rules for multi-option insurance products to better facilitate comparison between different investments; and
- introducing a new section in the KID to give prominence to sustainable objectives.
Petra Hielkema, Chair of EIOPA and the current Chair of the Joint Committee of the ESAs said: “The
PRIIPs key information document has brought increased transparency and
strengthened the protection of retail investors. However, supervisory
experiences have shown that improvements are needed to ensure that the
information provided is engaging to consumers, as well as to keep pace
with developments such as digitalisation and insights from behavioural
research. This is an opportunity to reflect on the approach to the KID
and we think the ESAs’ advice can be an important step towards a
substantive review of the PRIIPs rules.”
technical advice
ESAs
© EIOPA
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