On Tuesday 4 July, the European Commission adopted guidelines to help providers and distributors of retail investment products to put together their 'key information documents' (KIDs).
The KID document, which was brought in by the regulation on key information documents for packaged retail and insurance-based investment products (Priips) adopted in November 2014 (see EUROPE 11194), must be made available to consumers considering investing in a retail financial product. Designed to be a standardised and simple document, it must outline the objectives of the financial product, its risks, cost and yield, thus allowing European consumers to be able to compare the risks and potential earnings of these products more easily.
These guidelines, issued in the form of a Commission communication, do not create new legal rules, but clarify certain vital aspects of the regulation.
More specifically, they indicate the products covered by the legislation, stating that issuers and financial intermediaries also have a responsibility to assess which need to comply with the Priips regulation, on the basis of specific economic characteristics and the contractual conditions of each product.
As regards the distribution channels, it specifies that for any Priip product offered to investors, the issuer is required to draw up and publish a KID for that product on its website, so that advisers or persons selling the product can subsequently make it available to investors.
The guidelines also tackle more technical aspects, for instance covering multi-option Priips and derivative products.
The guidelines will ensure a smooth implementation of the Priips regulation by retail financial services sectors before it enters into application on 1 January 2018, the Commission said in a press release. (Original version in French by Marion Fontana)