PRIIPs Regulation and requirements

Posted on 01 Dec 2017

The PRIIPs Regulation and requirements

The EU Regulation No. 1286/2014, as published by the European Parliament, sets out the requirements in relation to Packaged Retail and Insurance-based Investment Products (PRIIPs Regulation) and the Key Information Document (KID).

The main purpose of the PRIIPs Regulation is to enhance investor protection for retail clients and increase transparency in the market, with the focus on sales and distribution.

The Regulation, which will be applicable as of 1st January 2018 (except for UCITS where a transitional period has been given up to 31/12/2019), immediately sets out the following requirements:

Any of the undermentioned products is defined as a PRIIP:

•             Mutual Funds

•             Insurance-based investment products

•             Convertible bonds

•             Derivatives

•             SPV products

•             Structured products and deposits

Products which do not fall within the PRIIP’s definition are:

•             Bonds

•             Shares

•             Non-structured deposits

•             Non-life insurance contracts

•             Pension funds

•             Life insurance contracts and indemnity insurance contracts

The Regulation applies to both manufacturers and distributors of PRIIPs.


Manufacturers are entities who structure a PRIIP or modify an existing PRIIP and include the following types of entities:

1.            Asset Management companies

2.            Life insurance companies

3.            Issuing banks

The main obligation and burden imposed on the manufacturers is the production of the KID. The KID must be provided to retail investors promptly and before being offered the PRIIP through the relevant means of communication. The KID must be prepared, submitted to the relevant National Competent Authority and published on the manufacturer’s website before the PRIIP is made available to retail clients. The KID should also be added to the pre-contractual information package. Finally, it is the obligation of the manufacturer to review it on an ongoing basis, revise it accordingly and make it available promptly.


Entities selling or providing advice on PRIIPs are considered to be the Distributors of PRIIPs and include the following types of entities:

1.            Credit Institutions

2.            Investment Firms

The main obligations of the distributors are to deliver the KID promptly (before the retail investor is bound by any contract or offer regarding the PRIIP) to retail investors. Similarly, as with manufacturers, distributors must in case of further investment in the same PRIIP, provide the retail investor the KID only if relevant changes in information occur.

KID requirements:

The Regulation requires that the KID is prepared, including having the following characteristics:

•             Be well written (easy to read, accurate and not misleading)

•             Be short (Maximum 3 of A4 pages)

•             Be part of the legal offering documentation

•             Be delivered promptly to the retail investor

•             Should be available in the language of the retail investor

The reason for these requirements is to enable the retail investor to easily understand the main features of the product along with the embedded risks and also to be able to compare products of a similar nature.

One of the most important sections of the KID is the one referring to risks and returns. The PRIIP Regulation requires the manufacturers to provide a small yet comprehensive description of the risk/return profile of the PRIIP. In addition, the KID should contain a summary risk indicator with supplementary explanations; possible maximum loss of invested capital; performance scenarios; conditions for returns or performance caps; and the impact of tax legislation.

The above is provided on an informative basis and specific advice should be sought in relation to PRIIPs and the preparation of KID for the distribution of PRIIPs.  Specialized legal services and advice are provided in each case. For further information, please contact Ms Ioanna Solomou, Associate, at