{"id":164,"date":"2021-09-09T13:20:00","date_gmt":"2021-09-09T13:20:00","guid":{"rendered":"https:\/\/iqeq.com\/gb\/2021\/09\/09\/everything-you-need-know-about-priips-disclosure-rules\/"},"modified":"2024-08-07T15:32:16","modified_gmt":"2024-08-07T15:32:16","slug":"everything-you-need-know-about-priips-disclosure-rules","status":"publish","type":"post","link":"https:\/\/iqeq.com\/gb\/insights\/everything-you-need-know-about-priips-disclosure-rules\/","title":{"rendered":"Everything You Need to Know About PRIIPs Disclosure Rules"},"content":{"rendered":"
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PRIIPs (packaged retail and insurance-based investment products) include the range of investment products marketed to retail investors which are subject to investment risk. These can be options, derivatives, funds, or other products.<\/p>\n

The EU first passed European PRIIPs Regulations in 2017. They were then transposed into UK law and \u2018onshored\u2019 post-Brexit. PRIIPs regulation was the first to deal with pre-contractual information by requiring key information documents (KIDs). KIDs provide consumer-friendly information about the key features of an investment product, including potential gains and the risks involved in investment. They must be provided by those who produce, advise on, or sell PRIIPs to consumers.<\/p>\n

The original aims of PRIIPs regulation were to improve protection for retail investors in the financial market and regain consumer confidence after the financial crash. KIDs enable investors to compare PRIIPs across the EU and the UK, whether they\u2019re offered by banking, insurance, or securities firms.<\/p>\n

But the FCA has had concerns about the PRIIPs framework for years\u2014before Brexit, they made concerted efforts to amend the EU rules. For some products, KIDs can contain misleading information thanks to the methodologies used to create performance scenarios. There has also been a distinct lack of clarity within the PRIIPs rules over the corporate bond market. So, post-Brexit, the UK is diverging from EU PRIIPs regulation to better protect consumers.<\/p>\n

The\u00a0<\/strong>new PRIIPs disclosure rules<\/strong><\/a>, as amended by the FCA, are effective January 1, 2022. The updated regulations will provide more clarity to consumers about what investment products are, the risk involved, and likely future performance.<\/strong><\/p>\n

Firms will have more flexibility to ensure that their communications are understandable and help consumers make well-informed investment decisions. Here are the three key ways PRIIPs will diverge from the EU framework, and what you need to know to prepare.<\/p>\n

Clarifying scope<\/h2>\n

The scope of EU PRIIPs regulation was potentially ambiguous, leaving room for doubt around certain terms and features of debt securities that would exclude them from being considered a PRIIP. Corporate bonds are the hot-button issue in this category, and the FCA is introducing rules to prevent corporate bonds with certain common features from being classified as PRIIPs.<\/p>\n

Debt securities will not be considered PRIIPs if:<\/p>\n