On 22 November 2018, HM Treasury published a draft of The Packaged Retail and Insurance-based Investment Products (Amendment) (EU Exit) Regulations 2019, together with explanatory information.
The draft statutory instrument is part of the wider work the UK Government is undertaking to prepare for the UK’s withdrawal from the EU. It is not intended to make policy changes, other than to reflect the UK’s new position outside the EU, and to smooth the transition. The changes made in the draft statutory instrument will not take effect on 29 March 2019 if the Withdrawal Agreement is finalised and a transitional period occurs.
The changes that the draft statutory instrument makes includes:
- the UK PRIIPs Regulation will only apply to those firms (UK and third country) that manufacture, advise on or sell PRIIPs to investors in the UK. The UK PRIIPs framework will not apply to any firms, including UK firms, that manufacture, advise on or sell PRIIPs to investors in the EU or in any other third country. Where UK firms are manufacturing PRIIPs for, or selling PRIIPs to, EU retail investors, they will still be subject to the requirements of the EU’s PRIIPs Regulation;
- any products which are currently outside the scope of the EU PRIIPs Regulation will also be outside the scope of the UK PRIIPs regime;
- the EU PRIIPs Regulation provides for an exemption for certain securities which are also outside the scope of the Prospectus Directive, such as non-equity securities issued or guaranteed by sovereigns and certain public-sector entities, and shares issued by central banks. Such securities issued or guaranteed by EEA sovereigns and public-sector bodies fall under this exemption. The draft statutory instrument extends this exemption so that all such securities issued or guaranteed by any sovereign or public-sector body, in any country, will be exempt from the scope of the UK PRIIPs Regulation;
- the EU PRIIPs Regulation contains an exemption from its requirements in respect of UCITS until 31 December 2019. The draft statutory instrument maintains this exemption in the UK for all UCITS, including EEA UCITS;
- the functions of ESMA and EIOPA are transferred to the FCA and the functions of the European Commission are transferred to HM Treasury; and
- responsibility for binding technical standards is transferred to the FCA