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Packaged financial products: PRIIPs Level 2 measures published

Packaged financial products: PRIIPs Level 2 measures published
  • United Kingdom
  • Financial services - Asset managers and funds


The European Commission has adopted the PRIIPs Delegated Regulation and related Annexes (Level 2 Measures).   

The Level 2 Measures add detail to the structure provided by the existing PRIIPs Regulation (the Regulation). Together these pieces of legislation introduce a new, EU-wide disclosure standard, the Key Information Document (KID) which must be provided to retail investors of certain products. We have discussed the KID and the scope of PRIIPs in previous briefings in February 2015 and May 2016.

What is the significance of the Level 2 Measures?

The substance of the Level 2 Measures does not vary materially from the previously published final regulatory technical standards (which are discussed in our previous briefings). This means that many of the uncertainties we identified in the previous texts remain unaddressed and are unlikely to be answered until, perhaps, the European Supervisory Agencies for banking, insurance and securities and markets publish a Q&A document later in the year. 

Notably, there is no indication of any delay to the implementation of PRIIPs, which will come into effect on 31 December 2016. The Level 2 Measures are also very clear (through the inclusion of a new recital) that there will also be no staggering of the implementation of PRIIPs – the Level 2 Measures will take effect at the same time as the Regulation.

What is the impact of Brexit?

Both the Regulation and the Level 2 Measures are structured as EU regulations meaning that they are directly effective upon EU citizens and businesses without any further need for implementation by Member States including the UK.

While there is significant uncertainly around the general impact of Brexit, it is clear that Brexit will have very little impact on the UK implementation of PRIIPs and we would draw firms’ attention to the FCA’s post-referendum statement which urges firms to “continue with implementation plans for legislation that is still to come into effect”. 

In the longer term, it is likely that as the PRIIPs regime is made up of directly-applicable EU regulations, the regime will fall away for UK manufacturers upon the UK’s exit from the EU unless:

  • the UK stays as part of the Single Market;
  • the UK renegotiates a specific deal with the EU which includes the PRIIPs regime; or
  • the UK government and the FCA adopt the PRIIPs regime as a piece of UK law (which could be on a transitional or ongoing basis). 

In any scenario, PRIIPs KIDs will be required for sales of PRIIPs to retail investors in EU countries.

For further information about Brexit, please visit Eversheds’ Brexit Hub which has extensive analysis on the subject.

What next?

The Council of the EU and the European Parliament now have to consider the Level 2 Measures. They are not expected to raise any objections and, assuming so, the Level 2 Measures will enter into force 20 days after their publication in the Official Journal of the EU.

We now eagerly await the FCA’s Consultation Paper on PRIIPs, due in the ‘summer’. This is expected to determine the UK impacts for PRIIPs such as filing requirements and whether UK NURS funds are able to benefit from a transitional period.

As there is no delay of the implementation of PRIIPs, firms with in-scope products should be pressing ahead with their PRIIPs initiatives and considering how they can deliver a compliant KID by the end of the year.

How Eversheds can help

As the leading legal provider to the UK authorised funds industry, the Eversheds team is experienced in drafting retail-facing scheme documentation including extensive practical experience implementing the UCITS KIID with dozens of firms. We are also able to take a critical view with team members who have reviewed investor collateral for the FCA and depositaries.

We are already advising firms on PRIIPs – providing template consultations, product health checks and drafting. We have also produced a range of self-help tools to assist firms with their PRIIPs projects including mock-up KIDs and workbooks.  For further information about how Eversheds can help you, please contact a member of our team.