A PRIIP KID is a mandatory, precontractual, standardised disclosure document, designed to give essential information about the PRIIP to the retail investors about the risks and rewards, in no more than three pages. Financial products falling within the scope of PRIIPS can only be sold if a KID has been provided to investors in the first place.
The European Commission has proposed the KIDs requirements as part of wider efforts to enhance the investor protection standards for retail clients, particularly with respect to sales and distribution. This is consistent with other regulations, such as the Markets in Financial Instruments Regulation (MiFID 2).
The aim of the PRIIPS KID is to enable more transparency and comparability between PRIIPS for retail investors. This is possible due to the information disclosed in nine different sections:
What is this product?
What are the risks and what could I get in return?
Performance Scenarios: predictive performance scenarios over the Recommended Holding Period.
What happens if the PRIIP 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.
AIFs (alternative investment funds), structured products and derivatives sold to retail investors fall under the scope of the regulation.
The regulation applies to all manufacturers and financial intermediaries (advisors) who distribute "Packaged Retail and Insurance-based Investment Products" to be invested by retail clients. Authorities have intentionally kept a wide scope to cover most of the market.
You have to prepare a KID if you offer one of the following products:
The Regulatory and Risk Management team of PwC Luxembourg can support you in the preparation of the PRIIPs KIDs. Our service offering includes the Summary Risk Indicator (SRI) computations, the performance scenarios computations, the calculation of cost, the drafting of the different narratives and finally the production of the KIDs in the necessary languages.
A dedicated platform allows to work efficiently on a large number of PRIIPS KIDs over a short period of time and ensure appropriate updates.
Third party review / validation
We combine the expertise of both our Regulatory and Risk Management teams to review and validate your company’s proposition when it comes to KID preparation and provide assurance beyond financial audit.
We provide tailored solutions under the Third Party Assurance umbrella, using reporting standards.
Our wide range of services enables you to prove to your clients that you provide reliable information and operate effectively within a well-controlled environment.
In October 2019, the ESAs (European Supervisory Authorities)1 emitted a consultation paper to receive amendments proposition regarding the Commission Delegated Regulation (EU) 2017/653 of 8 March 2017. The aim of this consultation paper was to:
However, in July, European regulators failed to agree on the changes for the first time and were unable to deliver a final proposal. This means that in the absence of legislative changes, from 1 January 2022, UCITS will be required to prepare a PRIIPs KID and a UCITS KIID.
This consultation paper included, among others, a discussion about the inclusion of past performances, a review of the probabilistic performance scenarios model and a review of the transaction cost computation methodology.
1. ESAs include : EBA (European Banking Association: Banking industry), ESMA (European Securities & Markets Authority: Asset Management), and EIOPA (European Insurance & Occupational Pensions Authority: Insurance sector)
Partner, Financial Services Consulting, PwC Luxembourg
Tel: +352 49 48 48 4137
Partner, PwC Luxembourg
Tel: +352 49 48 48 6325
Director, PwC Luxembourg
Tel: +352 62133 42 42