Likely impact: Even if Ucits KIIDs don’t disappear, expect to see changes, such as costs and performance becoming forward-looking and transaction costs being included.
Because Ucits funds all have essentially the same structure, much of the text, such as the target market and recommended holding period can be the same for almost all of them.
5) A possible extension of the scope of this regulation to other financial products
The regulation, the European regulators and the FCA all declined to provide a comprehensive list of products in scope of PRIIPs, although some guidelines have been provided.
If it’s a packaged investment product available for sale to retail customers – and not a pension product (see 7 below) – chances are it’s a Priip.
Other insurance products will have their own disclosure requirements under the Insurance Distribution Directive, so extending Priips will be limited to either greater clarity on those products on the fringes or new products that will have come to market.
Likely impact: Limited, as there aren’t many products other than pensions that could be included.
6) The appropriateness of introducing common rules on the need for all Member States to provide for administrative sanctions for infringements of this regulation
The Priips regulation required member states to lay down rules about sanctions and to co-operate with each other, while also setting out a list of possible sanctions and threw in this possibility of common rules on sanctions at the same time.
Not all countries are equally diligent at updating their national laws, so maybe this will do it for them.
Likely impact: This is mostly behind the scenes, so should have little effect on day-to-day operations.
7) Whether to propose a new legislative act guaranteeing appropriate disclosure of product information requirements or whether to include pension products in the scope of this regulation
Pension products/funds were the notable exceptions from the Priips regulation, so it is logical that consideration should be given to bringing them in scope.
A cynic might say that the regulators wanted to see if Priips KIDs put retail customers off investing before including pensions, as they don’t want to risk discouraging them from saving for retirement.
If the experience during 2018 shows that KIDs just aren’t quite right for pensions, a different pre-sale document could be introduced.
That means that, if Ucits continue with their own KIIDs, there could be three pre-sale disclosure regimes with similar but different documents out there.
At least the lawyers, project managers and business analysts won’t be short of work.
Likely impact: Whatever the reasons for excluding pensions so far, the chances are that a similar disclosure document will be produced for pensions before long. Ideally, a single document can be designed that works for Priips, Ucits and pensions.
