PRIIPS

UCITS and AIF management companies which already provide UCITS KIID-like(1) documents to their investors are generally not impacted by the requirement to produce a PRIIPs KID(2) from 31 December 2016. In particular UCITS management companies are clearly exempt from the scope of the PRIIPs Regulation(3) until end of 2019.

However, if distributors of unit-linked products which are not exempt need PRIIPs KID compliant-information for their wrappers, exemption may not apply. Moreover, Luxembourg AIFs at best disclose some minimum information in line with the Luxembourg AIFM Law, but they are not required (or even allowed) to produce UCITS KIID-like documents, as is the case in certain other EU jurisdictions. As a result, they do not benefit from the aforementioned minimum two years exemption. This could be an issue as the adaptation of technical systems and internal workflows takes time.

Consultations during 2015 showed that many aspects still need to be clarified or that proposed solutions are not workable (such as the calculation of transaction costs). ALFI and EFAMA actively participated in the debate and advocated postponing the application date. Moreover, ALFI supported the idea of providing for an optional switch regime from the UCITS KIID to the PRIIPs KID. This would leave enough time for managers to get prepared and would not require managers to maintain parallel systems for two years. However, this would require a legislative change to both the UCITS Directive and to the PRIIPs Regulation.

It is also worth mentioning the disclosure rules imposed by MiFID II regarding costs and charges, which will also impact the fund industry. At first sight these are not coherent with PRIIPs, an example being the disclosure of on-going charges. ESMA and other ESAs have stated their intention to align these requirements and ALFI will monitor developments closely.

(1)Key investor information document produced in line with the UCITS Directive

(2)Key information document produced in line with the PRIIPs Regulation

(3)Regulation (EU) N° 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products