As the festive period draws near, AIFs across Europe – including VCTs, PE/VC funds, investment trusts, OEICs and AUTs – have been left scratching their heads over PRIIPs, the new EU regulation that will require firms to provide additional information to potential investors in the form of a 3-page Key Information Document (KID).
The rules are set to come into force on 31 December, but have been beset by delays and controversy – and with little over two months to go, the substance of the changes remains unclear.
Problems stem from August, when MEPs voted to reject a key component of the plans, known as the regulatory technical standards (RTS). These spell out the exact form and content requirements for KIDs, and will be an essential part of any firm’s forward compliance planning.
With pressure mounting on the European Commission (more than 20 EU Member States have called for the changes to be postponed altogether), it has this week announced that a debate on next steps for PRIIPs has been moved forward – it is now due to take place on 9 November, instead of 22 November, as originally planned.
What does the new date signal?
Advocates of delaying the changes (who would prefer to see the implementation date coincide with that of MiFID II in January 2018) will be hoping the Commission puts a swift end to uncertainty, and nudges PRIIPs into the long grass.
On the other hand, there is a lot of political will to ensure PRIIPs goes ahead - especially after the delay to implementing MiFID II. Therefore the new date may represent a drive to get the plans signed off in time for the original December deadline.
Whatever the outcome, we won’t know for a few more weeks, leaving precious little time for firms to get their documentation in order if the 31 December date remains firm.
As the JAC signalled in their letter to European Commission, there are really only 3 options now:
In the meantime, we're helping firms to make the transition to KIDs as pain-free as possible. This includes considering whether PRIIPs is applicable to their product offering, and putting in place templates and processes ahead of December 2016.
Expect the next update on 9 November!
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