On 3 May 2022, the European Supervisory Authorities (ESAs) published their technical advice to the European Commission on the review of the Regulation on packaged retail and insurance-based investment products (PRIIPs Regulation). The advice will serve as input for developing the Commission’s Retail Investment Strategy.
Within section 3 of the technical advice, sections 3.1 to 3.6 cover the areas requested within the mandate from the Commission including how better to adapt the key information document (KID) to the digital age and whether to extend the scope of the Regulation to other financial products. In sections 3.7 to 3.12, the ESAs set out their views on other topics 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 summary, 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.
- Introducing a new section in the KID to give prominence to sustainable objectives.