PRIIPs Policy Statement (Updated)
FCA Policy Statement 17/6, issued on 2 May, sets out how disclosure requirements have changed to reflect the introduction of the PRIIPs key information document (KID), and sets out final rules and guidance. Given the delayed application of the PRIIPs Regulation, these rules have applied since 1 January 2018, the same day on which the PRIIPs Regulation took effect.
The Policy Statement can be located here.
The PRIIPs Regulation requires firms within its scope to draw up, publish and provide a KID for each PRIIP manufactured. The regulation, and related regulatory technical standards, set out the required form and content of the KID.
The PRIIPs Regulation requires firms to prepare, publish and provide a KID for each PRIIP manufactured. The regulation and related RTS s9 set out the form and content of the KID. Each KID needs to be no more than three pages long and contain specified information, presented in a pre-determined sequence. Firms need to give information about the PRIIP under sections entitled: What is this product?
- What are the risks and what could I get in return?
- What happens if [name of the PRIIP manufacturer] is unable to pay out?
- What are the costs?
- How long should I hold it and can I take money out early?
- How can I complain?
- Other relevant information.
As the PRIIPs Regulation is an EU regulation, it creates directly applicable legal requirements. The FCA has not transposed them into the FCA Handbook, but will refer to them. The regulation applies only where a PRIIP is offered to a retail investor.
These requirements apply to the following categories of products falling within the PRIIPs definition
- regulated collective investment schemes (CISs) that are:
- non-UCITS retail schemes (NURSs) (authorised unit trusts, open-ended investment companies and authorised contractual schemes)
- qualified investor schemes (QISs) (the same types as (a))
- individually recognised overseas schemes (FSMA s272 recognised schemes)
- unregulated CISs that are alternative investment funds, including, but not limited to:
- some unauthorised unit trust schemes
- private equity schemes
- unregulated CISs that are not alternative investment funds
- alternative investment funds that are not CISs, including shares or units in:
- an investment company or an investment trust,
- venture capital investments
- European Social Entrepreneurship Funds (EuSEFs)
- European Venture Capital Funds (EuVECAs)
- insurance-based investment products such as unit-linked policies, with-profits policies and Holloway sickness policies.
- fluctuating return annuities (that are not pension products) with features that result in fluctuating amounts being paid to the annuitant because of exposure to reference values (such as indices) or to the performance of one or more assets which are not directly purchased by the annuitant (e.g. purchased life annuities with variable returns).
- derivatives: options, futures, and contracts for differences.
- structured investment products (whatever their form); for example, these may be structured as unregulated CISs, convertible securities, insurance policies or instruments issued by special purpose vehicles (SPVs).
- structured deposits.
- securities issued by certain special purpose vehicles (SPVs) or special purpose entities (SPEs) with variable returns (e.g. convertible securities that may convert from equity to debt securities).
- debt securities (bonds, notes or debentures) where the amount repayable is subject to fluctuations because of exposure to reference values or to the performance of one or more assets which are not directly purchased by the investor.
A PRIPP manufacturer is
- any entity that manufactures PRIIPs, or
- any entity that makes changes to an existing PRIIP including, but not limited to, altering its risk and reward profile or the costs associated with an investment in a PRIIP.
The general FCA definition of a PRIIP is an investment where the amount repayable to a retail investor is subject to market fluctuations, or an insurance product where the maturity or surrender value is subject to market fluctuations.
How can Thistle help you?
Please contact Thistle if you need assistance in relation to any of these issues.