Members of the European Parliament (MEPs) extended the deadline by which investment companies must present a key information document (KID) to retail investors before they are offered a financial product until 31 December 2022, to give them time to prepare.

Before signing a contract, all small (non-professional) investors should receive a standard format KID to understand and compare packaged retail and insurance-based investment products (PRIIPs), estimate the total cost of their investment and be aware of the risk-reward profile.

EU-regulated undertakings for collective investments in transferable securities which gather assets from small investors and pool them to buy bonds, shares or other financial products, also qualify as PRIIPs.

MEPs noted that the key investor information and the KID, which is intended for retail investors, cover the same information, stressing that retail investors affected should not receive both documents for the same product as of 1 January 2023.

Finally, MEPs underlined their concerns that terms such as ‘retail investor’ and ‘product scope’ are not clearly defined. They expect an urgent report from the European Commission with proposals to address the existing limitations.