ECON votes for proposed EU PRIIP Level 1 changes

On March 20, 2024, the European Parliament’S Committee on Economic and Monetary Affaires (ECON) agreed and voted in favor of the new modernisation measures proposed for the PRIIPs Key Information Document (KID).

On March 25, 2024, ECON published its Report on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) No 1286/2014 as regards the modernisation of the key information document, which also contains the latest version of the draft regulation updating the PRIIPs Regulation (EU) No 1286/2014). The Report also contains some amendments made by ECON to the draft regulation.

In a next step, the legislative proposal, which aims at reinforcing investor protection rules, will be discussed and voted upon by the European Parliament.

The proposed amendments included in the latest draft regulation apply to:

• Extension of the length of the KID.

  • Considering the inclusion of additional information in the PRIIPs KID, the current page limitation of three A4 pages will be expanded to accommodate up to four A4 pages, easy to read, using characters of readable size, focus on the essential information relevant for retail investors and be easily understandable. This would make possible the addition of a new “Product at a glance” section to the PRIIP KID.

• Addition of an ESG section

  • A new section “How environmentally sustainable is this product?” will be introduced to the PRIIP KID, encompassing the following components:

    • Disclosure of the minimum proportion of the PRIIP’s investment associated with environmentally sustainable activities in accordance with SFDR Articles 5 and 6.

    • Where applicable, disclosure of the greenhouse gas emissions intensity associated with the PRIIP.

    • An assessment of whether the PRIIP manufacturer has considered the principal adverse impacts (PAI) of the investment on sustainability factors.

    • For products covered by SFDR Article 8 and Article 9, a link to relevant additional disclosure information.

• Performance scenarios and Past performance

  • In the majority of cases, forward-looking performance scenarios should be included in the PRIIP KID. However in specific instances where such scenarios could be misleading, the new rules would allow to replace forward-looking performance scenarios with past performance in the PRIIP KID for relevant PRIIPs. In which cases this would be allowed is to be precised by the European Supervisory Authorities (ESAs) in their Level 2 RTS.

• Digitalisation

  • Efforts to digitalize PRIIPs KIDs aim to enhance accessibility for retail clients, empowering them to make informed investment decisions. In this perspective, electronic dissemination should become the standard, with the option for retail investors to request a physical copy of the PRIIPs KID free of charge. According to a new amendment, “For the purposes of this Regulation, a website that fulfils certain requirements could be considered as a durable medium”. Moreover, the adoption of dynamic online tools, already prevalent among asset managers, is expected to become the norm. The ESAs will design relevant RTS for this digitalisation initiative, marking a significant advancement in fund information accessibility across the industry.

  • Such online tool should include the following key features

    • Ensure that interactivity does not compromise the clarity brought by the KID

    • Ensure that access to the KID alongside the interactive tool is easy

    • Provide a simulation feature which will allow retail investors to estimate costs over the recommended holding period (RHP)

    • Ensure that when multiple investment options are made available by the product manufacturer the information provided reflects the combination of options in accordance with the retail investor’s interests, and that the retail investor can easily access pre-contractual information related to underlying investment assets.

• Additional independent online comparison tool

  • The regulators, together with ESMA and EIOPA, plan to introduce an independent online comparison tool, which would include at minimum information related to the performance, risk level, RHP, costs and fees of a PRIIP, as well as mention its qualitative features. Its aim would be to leverage key information data provided by the long-discussed Single Access Point as its data source. Moving forward, PRIIPs KIDs shall include a link to this tool. Furthermore, management companies, investment firms and insurance intermediaries are encouraged to promote the use of this tool on their platforms and in relevant marketing materials, within 12 months after KIDs are available on the European Single Access Point.

• Marketing

  • A PRIIP distributor has an obligation to hand over a PRIIPs KIDs to a retail investor before they enter into a contract and to ensure that its availability coincides with any marketing communication about the product directed at the retail investor. Though this rule is technically not new, the new text, proposed as replacement of Article 13 § 1 of the PRIIPs regulation, clarifies that a person advising on, or selling a PRIIP, should not be allowed to share any marketing material associated with the PRIIP without also sharing the KID relevant for the PRIIP.

Although proposed amendments received approval from ECON, they must undergo formal voting in the EU Parliament. This process is anticipated to take place during the upcoming parliamentary hearings, following which an enforcement period of 18 months is foreseen. The extended timeframe is attributed to the necessity of corresponding RTS adjustments triggered by updates in Level 1 regulation. These adjustments are yet to be formally proposed by the ESAs and also require passage through the EU legislative process. Overall, cleversoft anticipates the new rules to be enforceable as of the beginning of 2026.

cleversoft’s regulatory watch is closely monitoring all regulatory developments. As part of our Compliance Commitment guarantee, we are happy to offer our customers continuously evolving regulatory services that take into account regulatory changes and new disclosure requirements.

We would be happy to guide and empower your regulatory compliance. Feel free to send us a message via the contact form on our website. We will be happy to answer your questions

If you have any questions about PRIIPs reporting and our services, please send us a message. Our experts will be happy to advise you on the details.

For more information on our PRIIPs services, please visit our website.