PRIIPs

PRIIPs

On 8 November 2018, the ESAs published a consultation paper (JC 2018 60) with draft amendments to Commission Delegated Regulation 2017/653 on the key information document (KID) for packaged retail and insurance-based investment products (PRIIPs), in preparation for the review of this framework.

In its feedback on the proposals (AMAFI / 18-69), which essentially involve performance scenarios, AMAFI stressed the following key messages:

·         The priority must be to correct problems seen with a number of KIDs that convey confusing or even misleading information to investors, particularly about performance scenario outcomes and costs;

·         In the case of performance scenario outcomes, only an amendment to the calculation methodology is beneficial and required;

·         The proposal to add past performance to KIDs is completely unsuited to derivative and structured products insofar actual past performance does not exist for these products prior to issuance. Preparing simulations based on the past performance of underlying assets is not an alternative because such products have specific performances that inherently depend on the structuring approach taken;

·         More generally, the proposed amendments and corrections must be carried out at Level 2, not Level 3, because only Level 2 measures can ensure better harmonisation of practices and afford participants greater legal certainty.

AMAFI also conveyed these messages in a summary memo (AMAFI / 19-02) which it sent to the staff of the AMF, ESMA and the European Commission.