Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on key information documents for investment products
Date: 2012-07-03
Institutions: European Commission
Subjects: access to information, consumer information, documentary reference recording, investment protection, official market, regulation of investments

EUROPEAN COMMISSION 

Strasbourg, 3.7.2012  
COM(2012) 352 final 

2012/0169 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on key information documents for investment products 

(Text with EEA relevance) 

{SWD(2012) 187 final} 
{SWD(2012) 188 final} 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

This proposal is about improving transparency in the investment market for retail investors. 

Retail  investment  products  –  which  include  investment  funds,  retail  structured  products  and 
certain types of insurance contracts used for investment purposes – are essential for meeting 
the needs of EU citizens for products with which to build up savings and investments, whilst 
also contributing to efficient capital markets that help fund EU economic growth.  

However,  asymmetries  of  information  about  investment  products  exist  between  retail 
investors and those designing such products and seeking to sell them to these investors. Retail 
investors are not thereby well equipped in protecting their own best interests. Such investors 
often face confusing and overly-complex information about possible investments, where risks 
and costs of products are difficult to assess or compare. This undermines the efficiency of the 
investment  markets,  leading  to  higher  prices  for  investors.  It  also  contributes  directly  to  the 
purchase  of  unsuitable  products  by  retail  investors,  leading  to  detriment  to  these  investors 
either through unexpected costs or losses, missed opportunities, or, in the worst case, through 
the loss of life savings with a dramatic impact on individual and family wellbeing. 

Existing disclosures vary according to the legal form a product takes, rather than its economic 
nature  or  the  risks  it  raises  for  retail  investors.  The  comparability,  comprehensibility  and 
presentation  of  information  vary,  so  the  average  investor  can  struggle  to  make  necessary 
comparisons  between  products.  Indeed,  product  disclosures  are  often  focused  more  on 
reducing legal risks for the manufacturer rather than providing effective, open and balanced 
communication to potential customers about the product in a form that the customer is likely 
to understand and use. Information – other than marketing – is typically overly lengthy and 
does not sufficiently highlight key points or information. 

The importance of addressing these issues has been underlined by the financial crisis. Retail 
investors  have  lost  money  with  investments  that  carried  risks  that  were  not  transparent  or 
understood  by  those  investors.  In  addition,  retail  investment  products  including  retail 
structured  products  or  insurance  contracts  for  investment  purposes  often  have  been  and 
continue to be marketed to retail investors as substitutes for simple products such as savings 
accounts although retail investors do not necessarily understand the differences. This is in a 
context where investor confidence has collapsed: a recent survey of consumers across the EU 
showed they trust the financial services less than all other industry sectors.  

Rebuilding confidence on a sound basis is vital. Improving provisions on transparency so that 
they work in favour or retail investors, taking into account their needs is a vital component of 
this.  

The  EU  has  already  taken  innovative  steps  through  the  development  of  the  UCITS  'key 
investor information' document (UCITS KIID). It was developed in a new way, on the basis 
of  robust  testing  of  disclosure  approaches  with  retail  investors  themselves,  to  shorten, 
streamline  and  focus  information  provided  to  the  greatest  extent  possible  and  ensure  the 
information is comprehensible for the average retail investor.  

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While disclosures for UCITS have therefore already been improved, those for the wider range 
of retail investment products have not. The task now is to address all such products: European 
retail investors should always receive short, comparable and standardised disclosures, termed 
'key  information  documents'  or  KIDs  in  this  explanatory  memorandum,  whatever  the 
investment product they are considering. 

The genesis of this proposal for an EU-wide KID is a request from the ECOFIN Council in 
May  2007  for  the  European  Commission  to  examine  the  coherence  of  EU  law  applying  to 
different types of retail investment products.  

A  first  stage  of  work  culminated  in  the  adoption  by  the  Commission  in  April  2009  of  a 
Communication  on  Packaged  Retail  Investment  Products  (PRIPs).  The  Commission 
concluded  in  the  Communication  that  a  sustainable  and  satisfactory  regulatory  environment 
for  the  sale  and  disclosures  of  retail  investment  products  can  only  be  established  through 
legislative change at the European level, since a lack of effective rules at the European level 
underpinned inconsistencies in practices across sectors. The Communication noted two areas 
of further work: rules applying to sales, and rules on product disclosures. This proposal stems 
from the latter work stream on product disclosures. 

The  proposal  takes  the  form  of  a  Regulation,  which  will  be  supported  by  detailed 
delegated/implementing acts. This Regulation sets the overall principles on the approach and 
content. The propsed delegated/implementing acts  would standardise the presentation of the 
information  required  by  this  Regulation  as  far  as  possible,  however  they  would  adapt 
measures  as  necessary  for  the  specific  features  of  other  retail  investment  products  and  their 
differing risk profiles, to ensure that retail customers always receive the key information they 
need to take informed decisions. These detailed measures will ultimately form a package with 
the proposed Regulation. They will have an impact on the overall costs which are related to 
the  introduction  of  the  KID  and  so  options  for  these  detailed  measures  will  themselves  be 
subject to a thorough impact assessment.  

This proposal forms part of a wider legislative package dedicated to rebuilding consumer trust 
in financial markets. The package has two other parts. The first is an extensive overhaul of the 
Insurance  Mediation  Directive  2002/92/EC  (IMD)  to  ensure  that  customers  benefit  from  a 
high level of protection when buying insurance products. The final part of the package aims at 
strengthening  the  function  of  the  depositary  for  UCITS  –  a  key  building  block  for  investor 
protection provided for by the UCITS Directive. To ensure the continued effectiveness of this 
building block, targeted amendments are proposed to Directive 2009/65/EC. 

The  measures  on  product  disclosure  proposed  in  this  Regulation  in  particular  complement 
investor protection measures on investment advice and sales services. As far as the sales of 
structured deposits are concerned these have been addressed by the proposal for a Directive of 
the  European  Parliament  and  of  the  Council  on  markets  in  financial  instruments  repealing 
Directive 2004/39/EC.1 The revision of the IMD will specifically deal with the improvement 
of the sales rules for investment insurance products. 

1 

COM(2011) 656 final. 

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2. 

RESULTS  OF  CONSULTATIONS  WITH  THE  INTERESTED  PARTIES  AND  IMPACT 
ASSESSMENTS  

The  initiative  is  the  result  of  an  extensive  dialogue  and  consultation  with  all  interested 
stakeholders.  

There have been two phases of such consultations: the first followed the Council request and 
preceded  the  publication  of  the  Commission  Communication  in  2009.  It  included  a  written 
call  for  evidence  in  October  2007,  a  Feedback  Statement  in  March  2008,  a  technical 
workshop was held with industry representatives in May 2008, and a high-level Open Hearing 
in July 2008.  The  second  phase  of  consultation was more  focussed  on concrete elements of 
the  work  stream  on  disclosure,  and  followed  the  Communication:  a  further  technical 
workshop was held in October 2009, and an Update on the work was published in December 
2009.  

In  parallel  to  these  efforts  the  three  Level  3  Committees  of  national  supervisors  (CEBS, 
CEIOPS  and  CESR)  worked  together  to  develop  their  thinking  on  this  subject.  The  first 
output was the joint submission to the Commission of three sectoral reports on 18 November 
2009. Recognising the cross-sectoral nature of this workstream, a joint Level 3 Task Force on 
PRIPs  was  established  in  2009  and  one  year  later  it  submitted  to  the  Commission  its  Final 
Report. 

The Commission launched a public consultation on concrete options in November 2010. The 
Commission  received  around  140  contributions  which  have  been  published  on  the 
Commission  website.  Responses  to  this  consultation  showed  support  across  industry, 
consumer and Member State stakeholders for the initiative and the broad approach proposed. 
Differences  of  view  focused  mostly  on  the  calibration  of  the  scope  of  the  regime,  and  the 
extent to which the UCITS key investor information approach might be copied for other retail 
investments. 

These  consultations  have  been  supplemented  by  a  series  of  discussions  with  consumer 
representatives (FIN-USE, Financial Services Consumer Group, and Financial Services User 
Group), regulators (Financial Services Committee, European Securities Committee, European 
Insurance and Occupational Pensions Committee) and industry representatives.  

This  proposal  builds  on  the  work  undertaken  by  the  three  Level  3  Committees  (CEBS, 
CEIOPS  and  CESR2);  opinions  expressed  during  consultations,  including  workshops, 
meetings  with  stakeholders,  as  well  as  on  the  experience  with  the  key  investor  information 
regime which has been developed for UCITS.  

In line with its "Better Regulation" policy, the Commission prepared an impact assessment of 
policy  alternatives.  Policy  options  related  to  the  scope  of  the  new  regime,  level  of 
standardisation, who should be held responsible for producing of the disclosure, and how to 
ensure its effective provision to retail investors. A number of studies, including an innovative 
study  focused  on  behavioural  insights  related  to  retail  investors,  supported  this  impact 
assessment work. 

The  draft  impact  assessment  report  was  examined  by  the  Impact  Assessment  Board,  and 
revised in line with its positive opinion of 15 April 2011. Amongst other improvements, the 

2 

CEBS, CEIOPS and CESR are the committees preceding EBA, EIOPA and ESMA respectively. 

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interaction  between  the  proposal  and  other  measures  on  investor  protection,  including  those 
on selling practices was further clarified, the concrete scope of products and entities impacted 
by  the  proposal  made  clearer,  the  possible  interaction  of  the  proposals  with  other  areas  of 
Union law clarified further, the analysis of options deepened and extended, and the cost and 
benefit  estimates  were  more  clearly  adjusted  to  reflect  steps  already  taken  for  UCITS.  In 
addition, the analysis of the other factors relevant for investor decision making was deepened 
to reflect more explicitly that investor disclosures are only one such factor, and that the role of 
advisors or sellers can be predominant in determining or influencing investor choices in many 
practical sales environments. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

3.1. 

Legal basis 

This proposal is based on Article 114 of the TFEU. It lays down uniform rules on investment 
product  disclosures  for  retail  investors.  It  aims  to  ensure  that  retail  investors  are  able  to 
understand  the  key  features  and  risks  of  retail  investment  products  and  to  compare  the 
features  of  different  products.  At  the  same  time  it  also  aims  to  ensure  a  level  playing  field 
between different investment product manufacturers and those selling those products. It aims 
therefore  to  establish  uniform  conditions  for  the  way  investors  in  the  Union  are  informed 
about  investment  products  by  the  means  of  a  short  document  and  how  the  information  is 
provided to them. This proposal therefore harmonises the operating conditions in relation to 
the information on investment products for all relevant players in the retail investment market, 
product manufacturers, persons selling and investors. 

Different  rules  that  vary  according  to  the  industry  that  offers  the  investment  products  and 
national regulation in this area create an un-level playing field between different products and 
distribution channels, erecting additional barriers to a Single Market in financial services and 
products.  Member  States  have  already  taken  divergent  and  uncoordinated  action  to  address 
shortcomings  in  investor  protection  measures  and  it  is  likely  that  this  development  would 
continue. There is increasingly cross border trade in retail investment products, but divergent 
national  approaches  will  lead  to  different  levels  of  investor  protection,  increased  costs  and 
uncertainties  for  product  providers  and  distributors  which  represent  an  impediment  to  the 
further cross-border  development  of  the retail investment  market.  Such further development 
would  also  require  easy  comparisons  between  products  of  different  types  across  the  Union. 
Divergent  standards  to  investor  disclosure  make  such  comparisons  very  difficult.  Such 
different rules could obstruct the fundamental freedoms and thus have a direct effect on the 
functioning  of  the  internal  market.  Experience  in  the  field  of  UCITS  also  suggests  that 
different national  approaches to disclosures can cause significant distortions of competition. 
Consequently, the appropriate legal basis is Article 114 TFEU. 

It is considered appropriate and necessary for this proposal to take the form of a regulation, so 
that  this  initiative  can  serve  its  purpose.  This  measure  is  only  dedicated  to  retail  investor 
disclosures. It does not address other rights or obligations of product manufacturers, persons 
selling  investment  products  or  investors  where  a  Directive  might  be  the  appropriate  legal 
form. Experience has shown that if a product disclosure is to contain standardized information 
enabling  investors  to  compare  between  different  investment  products,  this  can  only  be 
achieved  by  directly  applicable  provisions  which  do  not  require  Member  States  to  take  any 
additional implementing measures. If requirements on the content and the form of disclosure 
diverged from one Member State to another as a result of the transposition of a Directive, it 

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would create an unlevel playing field for market participants and an uneven level of investor 
protection. It is important that this regulation impose direct obligations on private parties as 
regards the preparation or the provision of the disclosure and the scope  of these obligations 
should not depend on national implementing measures. 

3.2. 

Subsidiarity and proportionality  

According to the principle of subsidiarity laid down in Article 5(3) of the TEU, action on the 
EU  level  should  be  taken  only  when  the  aims  envisaged  cannot  be  achieved  sufficiently  by 
Member  States  alone  and  can  therefore,  by  reason  of  the  scale  or  effects  of  the  proposed 
action, be better achieved by the EU.  

The  aims  of  this  proposal,  to  ensure  a  level  playing  field  across  the  EU  among  different 
product  manufacturers  and  persons  selling  investment  products  and  to  establish  a  uniform 
level  of  investor  protection  by  laying  down  harmonised  rules  on  transparency  cannot  be 
achieved by action taken at Member State level. National approaches may have a beneficial 
impact with respect to investor protection within the Member States in question. But national 
approaches are by definition restricted to the relevant national territory. Furthermore, there is 
the  risk  of  divergent  approaches  to  investor  disclosures.  They  cannot  create  a  Union  wide 
level playing field for investment product manufacturers and persons selling and an even level 
of investor protection in relation to investor disclosures across the EU. Therefore, action on 
the European level is needed. 

In  accordance  with  the  principle  of  proportionality  (Article  5(4)  TEU),  it  is  necessary  and 
appropriate  for  the  achievement  of  the  objectives  of  this  initiative  to  lay  down  principles 
relating  to  the  content  and  form  of  the  disclosure  for  retail  investment  products,  as  well  as 
rules on drawing up and provision of these disclosures to retail investors. Such requirements 
should be further developed at level 2, so that a requisite level of consistency in measures can 
be achieved to facilitate comparisons between investment products that originated in different 
industry sectors.  

3.3. 

Compliance with Articles 290 and 291 TFEU 

Since  1st  January  2011  the  Regulations  establishing  the  three  European  supervisory 
authorities EBA, EIOPA, and ESMA are applicable.3 In this respect the Commission wishes 
to recall the Statements in relation to Articles 290 and 291 TFEU it made at the adoption of 
the Regulations which took place on the 23rd September 2009 according to which: "As regards 
the process for the adoption of regulatory standards, the Commission emphasises the unique 
character  of  the  financial  services  sector,  following  from  the  Lamfalussy  structure  and 
explicitly recognised in Declaration 39 to the TFEU. However, the Commission has serious 
doubts  whether  the  restrictions  on  its  role  when  adopting  delegated  acts  and  implementing 
measures are in line with Articles 290 and 291 TFEU."  

3 

Regulation  (EU)  No.1093/2010,  Regulation  (EU)  1094/2010  and  Regulation  (EU)  1095/2010;  OJ 
15.12.2010, L 331, 12. 

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3.4. 

Detailed explanation of the proposal 

3.4.1. 

Investment  products  which  should  be  accompanied  by  a  KID  when  sold  to  retail 
investors 

Investment  products  can  be  manufactured  to  take  different  legal  forms,  so  that  the  same 
investment  proposition  is  offered  across  different  industry  sectors.  This  manufacturing  can 
give  the  impression  that  the  products  are  quite  different,  even  where  underlying  economic 
purposes  are  similar  (e.g.  a  fund,  a  deposit  and  a  unit-linked  insurance  contract  might  look 
very different, but might be equally used to deliver the same investment proposition). All of 
these  products  seek  to  address  a  relatively  simple  need:  capital  accumulation  that  beats  the 
risk-free rate. While these products vary in what they offer – some combine the prospect of 
capital  accumulation  with  a  capital  guarantee,  while  others  do  not;  some  combine  an 
investment element with another element (such as offering life insurance benefits) – they are 
all  sold  to  retail  investors  when  they  approach  financial  intermediaries  or  product 
manufacturers directly for products that address capital accumulation needs. 

Such investment products expose the investor to fluctuations in the market value of assets or 
in the payouts to be achieved from assets. But this exposure is not of the direct kind, as for 
instance  when  an  investor  buys  specific  assets  themselves.  Instead  these  products  and  those 
that manufacture them intercede between the investor and the markets, through a combination 
of  wrapping  of  those  assets,  or  other  mechanisms  that  differ  from  a  direct  holding 
("packaging").  Such  mechanisms  can  include  techniques  such  as  pooling  capital  from 
multiple investors to enable collective investments, or engineering exposures through the use 
of  derivative  instruments.  These  techniques  can  create  additional  complexity,  costs  and 
opacity in relation to the product. They can also, however, allow for risk spreading and other 
benefits that would not be available to the investor on their own; they allow ordinary investors 
to  participate  in  investment  markets  more  efficiently,  leading  to  deeper  capital  markets  and 
better  options  for  investors  seeking  to  diversify  their  investment  exposures.  To  capture  all 
such products, the definition of investment products in this Regulation refers directly to this 
'packaged'  form.  The  Commission  Communication  of  April  2009  referred  specifically  to 
packaged  retail  investment  products,  or  PRIPs;  following  consultations,  this  Regulation 
operationalizes this focus on packaged investments through a reference to the indirectness of 
holdings of assets. 

Such a definition would include products with capital guarantees, and those where, in addition 
to  capital,  a  proportion  of  the  return  is  also  guaranteed;  investment  funds,  whether  closed-
ended  or  open-ended  including  UCITS;  all  structured  products,  whatever  their  form  (e.g. 
packaged  as  insurance  policies,  funds,  securities  or  banking  products),  insurance  products 
whose surrender values are determined indirectly by returns on the insurance companies own 
investments  or  even  the  profitability  of  the  insurance  company  itself  as  well  as  derivative 
instruments.  Some  of  these  products  may  be  used  as  individual  retail  pension  products,  i.e. 
accumulation vehicles for the purposes of retirement planning.  

As a result of such a definition, the following products are not covered by this Regulation: 

- products where the precise rate of return is set in advance for the entire life of the product, 
since here the amount payable is not subject to fluctuations in the values of other assets (there 
is no investment risk); 

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-  plain  shares  and  bonds,  insofar  as  these  do  not  contain  a  mechanism  other  than  a  direct 
holding of the relevant assets;  

- deposits which are not 'structured', i.e. deposits which are determined by an interest rate such 
as e.g. EURIBOR or LIBOR;  

-  insurance  products  that  only  offer  insurance  benefits,  such  as  pure  protection  insurance 
products or non-life insurance products, which provide no surrender value that is exposed to 
fluctuations in the performance of one or more underlying assets or reference values. 

- occupational pension schemes covered by Directive 2003/41/EC or Directive 2009/138/EC. 

-  pension  products  for  which  a  financial  contribution  from  the  employer  is  required  by 
national law and where the employee has no choice as to the pension product provider. 

The  mechanisms  by  which  payouts  are  made  would  not  be  relevant  for  determining  scope: 
products  that  yield  an  income,  or  provide  a  single  pay  out  at  maturity,  or  that  adopt  some 
other arrangement, would all be in scope in so far as they satisfy the general definition. 

The definition does not include any reference to a product being intended for retail use, even 
though many investment products are designed with retail customers already in mind. This is 
due to the fact that the retail element may only be determined at the point of sale, when the 
distributor  sells  a  certain  investment  product  to  a  retail  customer,  or  provides  advice  on  it. 
However,  the  disclosure  would  need  to  be  produced  whenever  a  product  that  falls  within 
scope is to be sold to retail investors. 

3.4.2.  Responsibility to produce the KID - Article 5  

The  proposal  expressly  allocates  the  responsibility  for  preparing  the  KID  to  the  investment 
product  manufacturer,  within  the  meaning  of  the  Regulation:  which  means  a  person  who 
produces an investment product but also a person who has substantively changed the risk or 
cost structure of an existing investment product. (An entity combining other products would 
be  a  product  manufacturer).  This  definition  captures  a  situation  where  the  original 
manufacturer of a particular financial product does not exercise control over the final product. 
Not  every  change  to  the  original  product  triggers  such  a  shift  of  responsibility.  However, 
changes  which  significantly  alter  key  features  of  the  investment  product  such  as  its  risk 
reward profile or its costs shall be considered as remanufacturing the product as clarified in 
Article 4. Delegation of the preparation of a part or the whole disclosure to third parties, such 
as may occur under collaboration with distributors, has no impact on the overall responsibility 
of the product manufacturer with regard to the KID.  

3.4.3.  Form and content of KID - Articles 6 to 11 

This  proposal  introduces  the  principles  of  the  UCITS  KIID  regime  across  all  other  retail 
investment  products  –  all  KIDs  should  have  a  standardized  'look  and  feel'  and  contents 
designed  to  keep  them  focused  on  key  information  presented  in  a  common  way,  so  as  to 
promote comparability of information and its comprehension by retail investors. 

The KID should be seen as an opportunity to communicate effectively with potential investors 
in a plain manner. Therefore the proposal provides clear indications in relation to its form and 
language: it must be a short document, written in a concise manner, in non-technical language 
that avoids jargon, so as to be understandable by the average or typical retail investor, drawn 

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up  in  a  common  format  so  that  investors  are  able  to  easily  compare  between  different 
investment  products.  The  KID  should  be  a  stand-alone  document  in  the  sense  that  retail 
investors  should  not  be  required  to  read  other  documents  to  be  able  to  understand  the  key 
features of the investment product and take an informed investment decision, and it should be 
clearly distinct from marketing materials. 

The  proposal  specifies  the  essential  elements  of  the  investment  product  which  should  be 
described in the KID: the identity of the product and its manufacturer, the nature and the main 
features of the product, including whether the investor's might lose capital, its risk and reward 
profile,  costs,  and  past  performance  as  appropriate.  Other  information  may  be  included  for 
specific  products,  and  information  about  possible  future  outcomes  should  be  provided  for 
private pension products. The proposal sets out a common format and sequence of sections to 
promote  comparability.  It  is  of  central  importance  that  the  information  included  in  the 
document is kept to a minimum, as otherwise the document will become too complicated for 
the retail investor. In order to maintain its short form, no other information should be included 
in the KID. 

These requirements should be supported by delegated acts and supporting methodologies for 
calculating summary disclosures of risks and costs specified in technical standards. Such an 
approach  would  allow  for  a  maximal  level  of  consistency  and  comparability  of  disclosures 
consistent with the variety of products that fall under the scope of the regime. It is envisaged 
that  additional  supporting  initiatives  could  substantially  contribute  to  the  success  of  this 
initiative,  for  instance,  development  of  common  glossaries  of  terms  or  sharing  of  best 
practices in use of plain language. 

The  proposal  outlines  in  addition  measures  on  keeping  the  KID  up  to  date  and  on  ensuring 
appropriate references in accompanying marketing information. 

The proposal clarifies the liability of the investment product manufacturer on the basis of the 
KID  and  the  burden  of  proof  in  this  regard:  it  is  for  the  product  manufacturer  to  show  that 
they have complied with the Regulation when a retail investor makes a claim.  

3.4.4.  Obligation to provide the KID – Articles 12 to 13 

The proposal requires the KID to be provided to retail investors (rather than simply offered). 
Whoever  is  selling  the  product  to  retail  investors  (whether  a  distributor  or  the  product 
manufacturer in case of direct sales) must provide the disclosure to the potential investor in 
good  time  before  a  sale  is  transacted.  The  timing  of  provision  is  vital;  to  be  effective  the 
document  must  be  provided  before  an  investment  decision  is  taken.  However,  the  proposed 
Regulation provides for some flexibility as regards the timing of provision for certain forms 
of distribution that are not face-to-face. Also, the proposal includes requirements on the media 
used  for  providing  the  KID  to  retail  investors,  including  conditions  designed  to  allow  for 
media other than paper. These requirements aim to ensure the appropriateness of these media 
to the sale and the continued access of the retail investor to the information in the future. To 
achieve consistent outcomes, details of the method, timing and conditions for the provision of 
the disclosure to a retail investor will be clarified by delegated acts. 

3.4.5.  Complaints, redress and cooperation – Articles 14 to 17 

This proposal includes measures to ensure effective complaints procedures both on the part of 
the  investment  product  manufacturer  and  at  the  level  of  Member  States.  In  addition,  it 
includes measures to ensure effective access to dispute resolution procedures and redress. 

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The  cross-sectoral  character  of  this  proposal,  which  includes  banking,  insurance,  securities 
and  fund  products,  requires  enhanced  and  efficient  co-operation  between  competent 
authorities in all sectors. 

3.4.6.  Administrative sanctions and measures – Articles 18 to 22 

The Commission Communication on sanctions4 confirmed that 'ensuring proper application of 
EU rules is first and foremost the task of national authorities, who have the responsibility to 
prevent financial institutions from violating EU rules, and to sanction violations within their 
jurisdiction',  but  stressed  at  the  same  time  the  co-ordinated  and  integrated  way  in  which 
national authorities should act.  

In  line  with  the  Communication  and  following  other  initiatives  at  EU  level  in  the  financial 
sector,  this  proposal  contains  provisions  on  sanctions  and  measures  aimed  at  introducing  a 
harmonised  approach  to  sanctions  in  order  to  ensure  consistency.  It  is  important  that 
administrative sanctions and measures are applied where key provisions of this proposal are 
not  complied  with  and  that  those  sanctions  and  measures  are  effective,  proportionate  and 
dissuasive. 

3.4.7.  Transitional provision for UCITS and review clause – Articles 23 to 25 

Given the recent introduction of the KIID for UCITS, it would not be proportionate to apply 
the KID requirements of this Regulation to UCITS at this stage. For this reason, a transitional 
provision  is  included  to  allow  UCITS  to  continue  to  use  the  KIID  in  accordance  with 
Directive 2009/65/EC for five years from the entry into force of this Regulation. 

At  that  point,  the  Commission  would  be  able  to  assess  how  UCITS  should  be  treated  and 
whether  and  if  so  how  the  existing  UCITS  KIID  should  be  amended  so  as  to  achieve  the 
greatest  possible  degree  of  comparability  of  information  between  UCITS  and  other 
investment products subject to the KID under this regulation. Other than identifying possible 
adjustments to the content of the UCITS KIID, several options are conceivable for delivering 
these  adjustments  in  a  proportionate  way.  One  option  would  be  to  prolong  the  transitional 
arrangement  of  this  Regulation,  so  that  UCITS  would  continue  to  be  only  subject  to  the 
requirements  in  Directive  2009/65/EC  –  though  these  requirements  could  be  adjusted  to 
ensure  comparability  of  information.  Another  option  would  be  to  amend  Directive 
2009/65/EC by repealing the provisions on the UCITS KIID, moving the substantive rules on 
the disclosure for UCITS to this Regulation. A final option would be to leave the substantive 
rules  on  the  UCITS  KIID  in  the  UCITS  framework,  but  to  establish  that  this  document  is 
equivalent to the PRIPs KID under this Regulation. The assessment of options could include, 
where necessary, the identification of any changes to the KID in this Regulation that may be 
necessary. 

This Regulation foresees a review of the effectiveness of its measures after four years. This is 
timed prior to the end of the transitional period just mentioned so that conclusions can already 
be drawn on the appropriate treatment of UCITS. The review should also consider whether or 
not  the  scope  of  the  Regulation  should  be  broadened  further  to  cover  new  or  innovative 
investment products being offered in the Union. 

4 

Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic and Social Committee and the Committee of the Regions "Reinforcing sanctioning regimes 
in the financial services sector', of 8 December 2010 (COM (2010) 716 final). 

EN 

10 

   EN 

                                                 
3.4.8. 

Interaction with other Union law targeting the provision of information to consumers 

In  relation  to  other  disclosure  requirements  in  Union  law,  it  should  be  noted  that  the  KID 
required under this Regulation is a new disclosure document which will be designed in a way 
which  is  exclusively  tailored,  in  terms  of  its  contents  and  design,  to  the  needs  of  ordinary 
retail  investors  when  considering  and  comparing  different  investment  products  prior  to  an 
investment.  Its  design  and  its  purpose  are  therefore  not  fully  identical with  other  disclosure 
requirements such as the summary under the Prospectus Directive or disclosure requirements 
under Solvency II. These disclosures seek to fulfil purposes in addition to the delivery of key 
information to retail investors, such as ensuring transparency towards financial markets or a 
full picture of all details in relation to a proposed contract. Therefore, the KID cannot easily 
replace these other requirements and will exist in parallel to these requirements. However, the 
experience  with  the  requirements  of  this  Regulation  will  show  whether  in  practice  the  KID 
requirements  should  be  further  developed,  for  instance  so  as  to  replace  certain  disclosures 
required under other Union law.  

In  addition,  the  KID  requirements  exist  in  parallel  to  the  requirements  of  the  Directive  on 
distance marketing of consumer financial services (DMFSD) and the e-commerce Directive. 
The requirements of the DMFSD are service related and the requirements of the e-commerce 
Directive  are  supplementary  to  other  information  requirements  under  Union  law.  Therefore, 
this Regulation will not impact those Directives.  

4. 

BUDGETARY IMPLICATION  

There are no implications for the EU budget in that no additional funding and no additional 
posts  will  be  required  to  perform  these  tasks.  The  tasks  envisaged  for  the  European 
Supervisory Authorities fall within the scope of existing responsibilities for these Authorities, 
therefore the allocation of resources and staff foreseen in the approved Legislative Financial 
Statements for these Authorities will be sufficient to facilitate the execution of these tasks.  

EN 

11 

   EN 

2012/0169 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on key information documents for investment products 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 114 thereof, 

Having regard to the proposal from the European Commission,5 

After transmission of the draft legislative act to the national Parliaments, 

Having regard to the opinion of the European Central Bank,6  

Having regard to the opinion of the European Economic and Social Committee,7  

After consulting the European Data Protection Supervisor, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

Retail investors are increasingly offered a wide variety of different types of investment 
products  when  they  consider  making  an  investment.  These  products  often  provide 
specific investment solutions tailored to the needs of retail investors, but are frequently 
complex  and  difficult  to  understand.  Existing  disclosures  to  investors  for  such 
investment  products  are  uncoordinated  and  often  fail  to  aid  retail  investors  compare 
between  the  different  products,  and  in  comprehending  their  features.  As  a 
consequence,  retail  investors  have  often  made  investments  with  risks  and  costs  that 
were not fully understood  by  those investors, and have thereby on occasion suffered 
unforeseen losses.  

(2) 

Improving  provisions  on  transparency  of  investment  products  offered  to  retail 
investors is an important investor protection measure and a precondition for rebuilding 
confidence of retail investors in the financial market. First steps in this direction have 
been  already  been  taken  at  Union  level  through  the  development  of  the  key  investor 

5 
6 
7 

OJ , , p. . 
OJ , , p. . 
OJ C , , p. . 

EN 

12 

   EN 

                                                 
(3) 

(4) 

information  regime  established  in  Directive  2009/65/EC  of  the  European  Parliament 
and  of  the  Council  of  13  July  2009  on  the  coordination  of  laws,  regulations  and 
administrative  provisions  relating  to  undertakings  for  collective  investment  in 
transferable securities (UCITS).8  

Different rules that vary according to the industry that offers the investment products 
and national regulation in this area create an un-level playing field between different 
products  and  distribution  channels,  erecting  additional  barriers  to  a  Single  Market  in 
financial  services  and  products.  Member  States  have  already  taken  divergent  and 
uncoordinated action to address shortcomings in investor protection measures and it is 
likely  that  this  development  would  continue.  Divergent  approaches  to  investment 
product disclosures impede the development of a level playing field between different 
investment  product  manufacturers  and  those  selling  these  products  and  thus  distort 
competition.  It  would  also  create  an  uneven  level  of  investor  protection  with  the 
Union.  Such  divergences  represent  an  obstacle  to  the  establishment  and  smooth 
functioning of the Single Market. Consequently, the appropriate legal basis is Article 
114 TFEU, as interpreted in accordance with the consistent case law of the Court of 
Justice of the European Union. 

It is necessary to establish uniform rules at the level of the Union applying across all 
participants  of  the  investment  product  market  on  transparency  so  as  to  prevent 
divergences.  A  Regulation  is  necessary  to  ensure  that  a  common  standard  for  key 
information  documents  is  established  in  such  a  uniform  fashion  so  as  to  be  able  to 
harmonise the format and the content of these documents. The directly applicable rules 
of a Regulation should ensure that all participants in the investment product market are 
subject  to  the  same  requirements.  This  should  also  ensure  uniform  disclosures  by 
preventing  divergent  national  requirements  as  a  result  of  the  transposition  of  a 
Directive. The use of a Regulation is also appropriate to ensure that all those selling 
investment products are subject to uniform requirements in relation to the provision of 
the key information document to retail investors.  

(5)  Whilst improving investment product disclosures is essential in rebuilding the trust of 
retail investors in the financial markets, effectively regulated sales processes for these 
products  are  equally  important.  This  Regulation  is  complementary  to  measures  on 
distribution in the Directive 2004/39/EC of the European Parliament and the Council.9 
It is also complementary to measures taken on the distribution of insurance product in 
Directive 2002/92/EC of the European Parliament and of the Council.10 

(6) 

This Regulation should apply to all products regardless of their form or construction 
that  are  manufactured  by  the  financial  services  industry  to  provide  investment 
opportunities to retail investors, where the return offered to the investor is exposed to 
the performance of one or more assets or reference values other than an interest rate. 
This  should  include  such  investment  products  as  investment  funds,  life  insurance 
policies with an investment element, and retail structured products. For these products, 
investments  are  not  of  a  direct  kind  achieved  when  buying  or  holding  assets 
themselves.  Instead  these  products  intercede  between  the  investor  and  the  markets 
through a process of "packaging", wrapping or bundling together assets so as to create 

8 
9 
10 

OJ L 302, 17.11.2009, p.32. 
OJ L 145, 30.4.2004, p.1. 
OJ L 9, 15.1.2003, p.3. 

EN 

13 

   EN 

                                                 
(7) 

(8) 

(9) 

different  exposures,  provide  different  product  features,  or  achieve  different  cost 
structures  as  compared  with  a  direct  holding.  Such  "packaging"  can  allow  retail 
investors  to  engage  in  investment  strategies  that  would  otherwise  be  inaccessible  or 
impractical,  but  can  also  require  additional  information  to  be  made  available,  in 
particular to enable comparisons between different ways of packaging investments.  

In  order  to  ensure  this  Regulation  applies  solely  to  such  packaged  investment 
products,  insurance  products  that  do  not  offer  investment  opportunities  and  products 
solely  exposed  to  interest  rates  should  thereby  be  excluded  from  the  scope  of  the 
Regulation. Assets that would be held directly, such as corporate shares or sovereign 
bonds, are not packaged investment products, and should therefore be excluded. Since 
the focus of this Regulation is on improving the comparability and comprehensibility 
of  information  about  investment  products  being  marketed  to  retail  investors, 
occupational pension schemes which fall under the scope of Directive 2003/41/EC of 
the  European  Parliament  and  of  the  Council  of  3  June  2003  on  the  activities  and 
supervision  of  institutions  for  occupational  retirement  provision11  or  Directive 
2009/138/EC  of  the  European  Parliament  and  the  Council  of  25  November  2009  on 
the taking up and pursuit of the business of Insurance and Reinsurance (Solvency II),12 
should  not  be  subject  to  this  Regulation.  Similarly,  certain  occupational  pension 
products  which  fall  outside  the  scope  of  Directive  2003/41/EC  should  be  excluded 
from  the  scope  of  this  Regulation,  provided  that  a  financial  contribution  from  the 
employer is required by national law and provided that the employee has no choice as 
to the pension product provider. Investment funds dedicated to institutional investors 
are not within the scope of this Regulation either since they are not for sale to retail 
investors. However, investment products with the purpose of accumulating savings for 
individual pensions should remain in scope because they often compete with the other 
products  under  this  Regulation  and  are  distributed  in  a  similar  way  to  the  retail 
investor. 

In order to provide clarity on the relationship between the obligations established by 
this Regulation and obligations established by Directive 2003/71/EC of the European 
Parliament  and  the  Council  of  4  November  2003  on  the  prospectus  to  be  published 
when securities are offered to the public or admitted to trading and amending Directive 
2001/3413 and Directive 2009/138/EC, it is necessary to establish that these Directives 
continue to apply in addition to this Regulation. 

Investment  product  manufacturers  –  such  as  fund  managers,  insurance  undertakings, 
issuers of securities, credit institutions or investment firms – should draw up the key 
information document for the investment products they manufacture, as they are in the 
best position to know the product and are responsible for it. The document should be 
drawn up by the investment product manufacturer before the products can be sold to 
retail  investors.  However,  where  a  product  is  not  sold  to  retail  investors,  there  is  no 
necessity to draw up a key information document, and where it is impractical for the 
investment product manufacturer to draw up the key information document, this may 
be delegated to others. In order to ensure widespread dissemination and availability of 
key  information  documents,  this  Regulation  should  allow  for  publication  by  the 
investment product manufacturer by means of a website of their choice. 

11 
12 
13 

OJ L 235, 23.9.2003, p.10. 
OJ L 335, 17.12.2009, p.1. 
OJ L 345, 21.12.2003, p. 64. 

EN 

14 

   EN 

                                                 
(10)  To  meet  the  needs  of  retail  investors,  it  is  necessary  to  ensure  that  information  on 
investment products is accurate, fair, clear and not misleading for those investors. This 
Regulation  should  therefore  lay  down  common  standards  for  the  drafting  of  the  key 
information document, in order to ensure that it is comprehensible for retail investors. 
Given the difficulties many retail investors have in understanding specialist financial 
terminology, particular attention should be paid to the vocabulary and style of writing 
used  in  the  document.  Rules  should  also  be  laid  down  on  the  language  in  which  it 
should be drawn up. Furthermore, retail investors should be able to understand the key 
information document on its own without referring to other information. 

(11)  Retail investors should be provided with the information necessary for them to take an 
informed  investment  decision  and  compare  different  investment  products,  but  unless 
the  information  is  short  and  concise  there  is  a  risk  they  will  not  use  it.  The  key 
information  document  should  therefore  only  contain  key  information,  notably  as 
regards the nature and features of the product, including whether it is possible to lose 
capital,  the  costs  and  risk  profile  of  the  product,  as  well  as  relevant  performance 
information,  and  certain  other  specific  information  which  may  be  necessary  for 
understanding the features of individual types of products, including those intended to 
be used for retirement planning.  

(12)  The  key  information  document  should  be  drawn  up  in  a  format  which  allows  retail 
investors  to  compare  different  investment  products,  since  consumer  behaviours  and 
capabilities are such that the format, presentation and content of information must be 
carefully  calibrated  to  maximise  understanding  and  use  of  information.  The  same 
order of items and headings for these items should be followed for each document. In 
addition, the details of the information to be included in the key information document 
for  different  products  and  the  presentation  of  this  information  should  be  further 
harmonised  through  delegated  acts  that  take  into  account  existing  and  on-going 
research  on  consumer  behaviour,  including  results  from  testing  the  effectiveness  of 
different  ways  of  presenting  information  with  consumers.  In  addition,  some 
investment  products  give  the  retail  investor  a  choice  between  multiple  underlying 
investments.  Those  products  should  be  taken  into  account  when  drawing  up  the 
format.  

(13) 

Increasingly  retail  investors  are  not  only  seeking  financial  returns  with  their 
investment  decisions.  Often  they  also  pursue  other  purposes  such  as  social  or 
environmental  goals.  In  addition,  information  about  non-financial  aspects  of 
investments  can  be  important  for  those  seeking  to  make  sustainable,  long-term 
investments. However, information on social, environmental or governance outcomes 
being  sought  by  the  investment  product  manufacturer  can  be  difficult  to  compare  or 
may  be  absent.  Therefore,  it  is  desirable  to  further  harmonise  the  details  of  the 
information  on  whether  environmental,  social  or  governance  issues  have  been  taken 
into account, and if so in what ways.  

(14)  The key information document should be clearly distinguishable from any marketing 
communications. Its significance should not be diminished by those other documents.  

(15) 

In  order  to  ensure  that  the  key  information  document  contains  reliable  information, 
this  Regulation  should  require  investment  product  manufacturers  to  keep  the  key 
information  document  up  to  date.  To  this  end,  it  is  necessary  that  detailed  rules 
relating  to  the  conditions  and  frequency  of  the  review  of  the  information  and  the 

EN 

15 

   EN 

revision  of  the  key  information  document  are  laid  down  in  a  delegated  act  to  be 
adopted by the Commission. 

(16)  Key  information  documents  are  the  foundation  for  investment  decisions  by  retail 
investors.  For  this  reason,  investment  product  manufacturers  have  an  important 
responsibility  towards  retail  investors  in  ensuring  that  they  comply  with  the  rules  of 
this Regulation. It is therefore important to ensure that retail investors who relied on a 
key investor document for their investment decision have an effective right of redress. 
It should also be ensured that all retail investors across the Union have the same right 
to  seek  compensation  for  damages  they  may  suffer  due  to  failures  on  the  part  of 
investment product manufacturers in complying with the requirements set out in this 
Regulation.  Therefore,  rules  regarding  the  liability  of  the  investment  product 
manufacturers  should be harmonised. This Regulation should establish that the retail 
investor should be able to hold the product manufacturer liable for an infringement of 
this  Regulation  in  case  a  loss  is  caused  through  the  use  of  the  key  information 
document. 

(17)  As retail investors in general do not have close insight as to the internal procedures of 
investment  product  manufacturers,  a  reversal  of  the  burden  of  proof  should  be 
established.  The  product  manufacturer  would  have  to  prove  that  the  key  information 
document was drawn up in compliance with this Regulation. However, it would be for 
the  retail  investor  to  demonstrate  that  his  loss  has  occurred  due  to  the  use  of  the 
information in the key information document because this matter falls within the direct 
personal sphere of the retail investor. 

(18)  Regarding matters concerning the civil liability of a investment product manufacturer 
and which are not covered by this regulation, such matters should be governed by the 
applicable national law determined by the relevant rules of International Private Law. 
The competent court to decide on a claim for civil liability brought by a retail investor 
should be determined by the relevant rules on International Jurisdiction.  

(19)  So  that  the  retail  investor  is  able  to  take  an  informed  investment  decision,  persons 
selling  investment  products  should  be  required  to  provide  the  key  information 
document in good time before any transaction is concluded. This requirement should 
generally  apply  irrespective  of  where  or  how  the  transaction  takes  place.  Persons 
selling include both distributors and the investment product manufacturer themselves 
where they choose to sell the product directly to retail investors. To ensure necessary 
flexibility  and  proportionality,  retail  investors  who  wish  to  conclude  a  transaction 
using  a  means  of  distance  communication  should  be  able  to  receive  the  key 
information document after the conclusion of the transaction. Even in this case the key 
information  document  would  be  useful  for  the  investor,  for  instance  to  allow  the 
investor to compare the product purchased with that described in the key information 
document.  This  Regulation  is  without  prejudice  to  the  Directive  2002/65/EC  of  the 
European Parliament and the Council.14 

(20)  Uniform rules should be laid down in order to give the person selling the investment 
product  a  certain  choice  with  regard  to  the  medium  in  which  the  key  information 
document is provided to retail investors allowing for use of electronic communications 

14 

OJ L 271, 9.10.2002, p.16. 

EN 

16 

   EN 

                                                 
where it is appropriate having regard to the circumstances of the transaction. However, 
the retail investor should be given the option to receive it on paper. In the interest of 
consumer  access  to  information,  the  key  information  document  should  always  be 
provided free of charge. 

(21)  To ensure the trust of retail investors in investment products, requirements should be 
established  for  appropriate  internal  procedures  which  ensure  that  retail  investors 
receive  a  substantive  response  from  the  investment  product  manufacturer  to 
complaints. 

(22)  Procedures  for  alternative  dispute  resolution  allow  for  a  quicker  and  less  expensive 
settlement of disputes than the courts and lighten the burden on the court system. For 
that  purpose  investment  product  manufacturers  and  the  persons  selling  investment 
products should be under an obligation to participate in those procedures initiated by 
retailed investors concerning the rights and obligations established by this Regulation, 
subject  to  certain  safeguards  in  conformity  with  the  principle  of  effective  judicial 
protection.  In  particular,  the  procedures  for  alternative  dispute  resolution  should  not 
infringe the rights which the parties to such procedures have to bring legal proceedings 
before the courts.  

(23)  As  the  key  information  document  should  be  produced  for  investment  products  by 
entities operating in the banking, insurance, securities and fund sectors of the financial 
markets,  it  is  of  utmost  importance  to  ensure  a  smooth  co-operation  between  the 
various authorities supervising investment product manufacturers so that they have a 
common approach to the application of this Regulation. 

(24) 

(25) 

In  line  with  the  Commission  Communication  of  December  2010  on  reinforcing 
sanctioning  regimes  in  the  financial  sector15  and  in  order  to  ensure  that  the 
requirements set out in this Regulation are fulfilled, it is important that Member States 
take  necessary  steps  to  ensure  that  breaches  of  this  Regulation  are  subject  to 
appropriate  administrative  sanctions  and  measures.  In  order  to  ensure  that  sanctions 
have a dissuasive effect and to strengthen investors' protection by warning them about 
investment  products  marketed  in  breach  of  this  Regulation,  sanctions  and  measures 
should normally be published, except in certain well defined circumstances. 

In  order  to  fulfil  the  objectives  of  this  Regulation,  the  power  to  adopt  acts  in 
accordance with Article 290 of the Treaty on the Functioning of the European Union 
should be delegated to the Commission in respect of specifying details with regard to 
the presentation and the format of the key information document, on the content of the 
information  to  be  included  in  the  key  information  document,  detailed  requirements 
with regard to the timing for provision of the key information document as well as in 
relation to its revision and review. It is of particular importance that the Commission 
carry  out  appropriate  consultations  during  its  preparatory  work.  The  Commission, 
when preparing and drawing up delegated acts, should ensure a simultaneous, timely 
and  appropriate  transmission  of  relevant  documents  to  the  European  Parliament  and 
Council.  

(26)  The  Commission  should  adopt  draft  regulatory  technical  standards  developed  by 
ESMA,  EBA  and  EIOPA  according  to  Article  8  regarding  the  methodology 

15 

COM(2010)716. 

EN 

17 

   EN 

                                                 
underpinning  the  presentation  of  risk  and  reward  and  the  calculation  of  costs  by  the 
means of delegated acts pursuant to Article 290 of the Treaty on the Functioning of the 
European  Union  and  in  accordance  with  the  respective  Articles  10  to  14  of  the 
Regulations (EU) No. 1093/2010, 1094/2010 and 1095/2010.  

(27)  Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 
on the protection of individuals with regard to the processing of personal data and on 
the free movement of such data16 governs the processing of personal data carried out 
in the Member States in the context of this Regulation and under the supervision of the 
competent authorities. Regulation (EC) No 45/2001 of the European Parliament and of 
the Council of 18 December 2000 on the protection of individuals with regard to the 
processing  of  personal  data  by  the  EU  institutions  and  bodies  and  on  the  free 
movement of  such  data,17 governs the processing of personal data carried out by the 
European  Supervisory  Authorities  pursuant  to  this  Regulation  and  under  the 
supervision  of  the  European  Data  Protection  Supervisor.  Any  processing  of  personal 
data  carried  out  within  the  framework  of  this  Regulation,  such  as  the  exchange  or 
transmission  of  personal  data  by  the  competent  authorities  should  be  in  accordance 
with  Directive  95/46/EC  and  any  exchange  or  transmission  of  information  by  the 
European Supervisory Authorities should be in accordance with Regulation (EC) No 
45/2001. 

(28)  While  UCITS  are  investment  products  within  the  meaning  of  this  Regulation,  the 
recent  establishment  of  the  key  investor  information  requirements  under  Directive 
2009/65/EC  means  that  it  would  be  proportionate  to  provide  to  such  UCITS  a 
transitional period of 5 years after the entry into force of this Regulation during which 
time  they  would  not  be  subject  to  this  Regulation.  Following  this  period  they  would 
become subject to this Regulation in the absence of any extension of this transitional 
period. 

(29)  A review of this Regulation should be carried out four years after the entry into force 
of  this  Regulation  in  order  to  take  account  of  market  developments,  such  as  the 
emergence  of  new  types  of  investment  products,  as  well  as  developments  in  other 
areas of Union law and the experiences of Member States. The review should assess 
whether  the  measures  introduced  have  improved  the  average  retail  investors' 
understanding of investment products and the comparability of the products. It should 
also consider whether the transitional period applying to UCITS should be extended, 
or whether other options for the treatment of UCITS might be considered. On the basis 
of the review, the Commission should submit a report to the European Parliament and 
the Council accompanied, if appropriate, by legislative proposals.  

(30) 

In  order  to  give  investment  product  manufacturers  and  persons  selling  investment 
products sufficient time to prepare for the practical application of the requirements of 
this  Regulation,  the  requirements  of  this  Regulation  should  not  become  applicable 
until two years after the entry into force of this Regulation.  

(31)  This Regulation respects fundamental rights and observes the principles recognised in 

particular by the Charter of the Fundamental Rights of the European Union. 

16 
17 

OJ L 281, 23.11.1995, p.31. 
OJ L 8, 12.1.2001, p.1. 

EN 

18 

   EN 

                                                 
(32)  Since  the  objective  of  the  action  to  be  taken,  namely  to  enhance  retail  investors' 
protection and improve their confidence in investment products, including where these 
products are sold cross-border, cannot be sufficiently achieved by the Member States 
acting  independently  of  one  another,  and  only  action  at  the  European  level  could 
address the identified weaknesses, and can therefore by reason of its effects be better 
achieved at Union level, the Union may adopt measures, in accordance with principle 
of  subsidiarity  as  set  out  in  Article  5  of  the  Treaty  of  the  European  Union.  In 
accordance  with  the  principle  of  proportionality,  as  set  out  in  that  Article,  this 
Regulation does not go beyond what is necessary in order to achieve those objectives, 

HAVE ADOPTED THIS REGULATION: 

CHAPTER I 
SUBJECT MATTER, SCOPE AND DEFINITIONS 

Article 1 

This  Regulation  lays  down  uniform  rules  on  the  format  and  content  of  the  key  information 
document  to  be  drawn  up  by  investment  product  manufacturers  and  uniform  rules  on  the 
provision of this document to retail investors. 

Article 2 

This Regulation shall apply to the manufacturing and selling of investment products.  

However, it shall not apply to the following products: 

(a) 

insurance products which do not offer a surrender value or where that surrender 
value  is  not  wholly  or  partially  exposed,  directly  or  indirectly,  to  market 
fluctuations;  

(b)  deposits with a rate of return that is determined in relation to an interest rate;  

(c) 

securities referred to in points (b) to (g), (i) and (j) of Article 1(2) of Directive 
2003/71/EC;  

(d)  other securities which do not embed a derivative;  

(e)  occupational pension schemes falling under the scope of Directive 2003/41/EC 

or Directive 2009/138/EC; and 

(f) 

pension  products  for  which  a  financial  contribution  from  the  employer  is 
required  by  national  law  and  where  the  employee  has  no  choice  as  to  the 
pension product provider. 

EN 

19 

   EN 

Article 3 

1. 

2. 

Where investment product manufacturers subject to this Regulation are also subject 
to Directive 2003/71/EC, this Regulation and Directive 2003/71/EC shall both apply. 

Where investment product manufacturers subject to this Regulation are also subject 
to  Directive  2009/138/EC,  this  Regulation  and  Directive  2009/138/EC  shall  both 
apply. 

For the purposes of this Regulation, the following definitions shall apply: 

Article 4 

(a) 

'investment product' means an investment where regardless of the legal form of 
the investment the amount repayable to the investor is exposed to fluctuations 
in reference values or in the performance of one or more assets which are not 
directly purchased by the investor; 

(b) 

'investment product manufacturer' means: 

i) 

any natural or legal person who manufactures an investment product; 

ii) 

any natural or legal person who makes changes to an existing investment 
product by altering its risk and reward profile or the costs associated with 
an investment in the investment product;  

(c) 

'retail investors' means: 

i) 

retail  clients  as  defined  in  point  (12)  of  Article  4(1)  of  Directive 
2004/39/EC;  

ii) 

customers within the meaning of Directive 2002/92/EC; 

(d) 

(e) 

(f) 

'pension products' means products which under national law are recognised as 
having the primary purpose of providing the investor an income in retirement, 
and which entitles the investor to certain benefits;  

'durable  medium'  means  a  durable  medium  as  defined  in  Article  2(m)  of 
Directive 2009/65/EC;  

'competent authorities' means the national authorities of Member States, legally 
empowered  to  supervise  the  investment  product  manufacturer  or  a  person 
selling an investment product to a retail investor. 

EN 

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   EN 

CHAPTER II 
KEY INFORMATION DOCUMENT 

SECTION 1 
DRAWING UP THE KEY INFORMATION DOCUMENT 

Article 5 

The  investment  product  manufacturer  shall  draw  up  a  key  information  document  in 
accordance with the requirements laid down in this Regulation for each investment product it 
produces  and  shall  publish  the  document  on  a  website  of  its  choice  before  the  investment 
product can be sold to retail investors.  

SECTION II 
FORM AND CONTENT OF THE KEY INFORMATION DOCUMENT 

1. 

2. 

3. 

4. 

5. 

Article 6 

The key information document shall be accurate, fair, clear and not misleading.  

The  key  information  document  shall  be  a  stand-alone  document,  clearly  separate 
from marketing materials. 

The key information document shall be drawn up as a short document which is: 

(a)  presented and laid out in a way that is easy to read, using characters of readable 

size; 

(b) 

clearly  expressed  and  written  in  language  that  communicates  in  a  way  that 
facilitates  the  retail  investor’s  understanding  of  the  information  being 
communicated, in particular where: 

(i) the language used is clear, succinct and comprehensible; 

(ii) the use of jargon is avoided; 

(iii) technical terms are avoided when everyday words can be used instead. 

Where colours are used in the key information document, they shall not diminish the 
comprehensibility of the information in the event that the key information document 
is printed or photocopied in black and white. 

Where the corporate branding or logo of the investment product manufacturer or the 
group  to  which  it  belongs  is  used  in  the  key  information  document,  it  shall  not 
distract the retail investor from the information contained in the document or obscure 
the text. 

EN 

21 

   EN 

Article 7 

The key information document shall be written in the official language, or one of the official 
languages  of  the  Member  State  where  the  investment  product  is  sold,  or  in  a  language 
accepted by the competent authorities of that Member State, or where it has been written in a 
different language, it shall be translated into one of these languages. 

Article 8 

1. 

The title ‘Key Information Document’ shall appear prominently at the top of the first 
page  of  the  key  information  document.  An  explanatory  statement  shall  appear 
directly underneath the title. It shall read:  

‘This  document  provides  you  with  key  information  about  this  investment  product.  It  is  not 
marketing material. The information is required by law to help you understand the nature of 
this investment product and the risks of investing in it. You are advised to read it so that you 
can take an informed decision about whether to invest.’ 

2. 

The key information document shall contain the following information: 

(a)  under a section at the beginning of the document, the name of the investment 

product and identity of the investment product manufacturer; 

(b)  under a section titled "What is this investment?", the nature and main features 

of the investment product, including  

i) the type of the investment product; 

ii) its objectives and the means for achieving them;  

iii)  an  indication  of  whether  the  investment  product  manufacturer  targets 
specific environmental, social or governance outcomes, either in respect 
of his conduct of business or in respect of the investment product, and if 
so, an indication of the outcomes being sought and how these are to be 
achieved; 

iv)  where  the  investment  product  offers  insurance  benefits,  details  of  these 

insurance benefits; 

v) the term of the investment product, if known;  

vi) performance scenarios, if this is relevant having regard to the nature of the 

product; 

(c)  under a section titled "Could I lose money?", a brief indication of whether loss 

of capital is possible, including  

i)  any  guarantees  or  capital  protection  provided,  as  well  as  any  limitations  to 

these;  

ii) whether the investment product is covered by a compensation or guarantee 

scheme; 

EN 

22 

   EN 

(d)  under  a  section  titled  "What  is  it  for?"  an  indication  of  the  recommended 
minimum  holding  period  and  the  expected  liquidity  profile  of  the  product 
including the possibility and conditions for any disinvestments before maturity, 
having regard to the risk and reward profile of the investment product and the 
market evolution it targets; 

(e)  under a section titled "What are the risks and what might I get back?", the risk 
and reward profile of the investment product, including a summary indicator of 
this profile and warnings in relation to any specific risks that may not be fully 
reflected in the summary indicator;  

(f) 

under  a  section  titled  "What  are  the  costs?",  the  costs  associated  with  an 
investment in the investment product, comprising both direct and indirect costs 
to be borne by the investor, including summary indicators of these costs; 

(g)  under a section titled "How has it done in the past?", the past performance of 
the  investment  product,  if  this  is  relevant  having  regard  to  the  nature  of  the 
product and the length of its track record; 

(h) 

for pension products, under a section titled "What might I get when I retire?", 
projections of possible future outcomes. 

The investment product manufacturer may only include other information where it is 
necessary  for  the  retail  investor  to  take  an  informed  investment  decision  about  a 
specific investment product.  

The  information  referred  to  in  paragraph  2  shall  be  presented  in  a  common  format 
including  the  common  headings  and  following  the  standardised  order  set  out  in 
paragraph  2,  so  as  to  allow  for  comparison  with  the  key  information  document  for 
any  other  investment  product.  The  key  information  document  shall  prominently 
display a common symbol to distinguish the document from other documents. 

The  Commission  shall  be  empowered  to  adopt  delegated  acts  in  accordance  with 
Article  23  specifying  the  details  of  the  presentation  and  the  content  of  each  of  the 
elements of information referred to in paragraph 2, the presentation and details of the 
other information the product manufacturer may include within the key information 
document as referred to in paragraph 3, and the details of the common format and the 
common symbol referred to in paragraph 4. The Commission shall take into account 
the differences between investment products and the capabilities of retail investors as 
well  as  the  features  of  investment  products  that  allow  the  retail  investor  to  select 
between  different  underlying  investments  or  other  options  provided  for  by  the 
product, including where this selection can be undertaken at different points in time, 
or changed in the future.  

3. 

4. 

5. 

6. 

The European Banking Authority (EBA), the European Insurance and Occupational 
Pensions  Authority  (EIOPA)  and  the  European  Securities  and  Markets  Authority 
(ESMA) shall develop draft regulatory standards to determine:  

(a) 

the methodology underpinning the presentation of risk and reward as referred 
to in point (e) of paragraph 2 of this Article and  

(b) 

the calculation of costs as referred to in point (f) of paragraph 2 of this Article. 

EN 

23 

   EN 

The draft regulatory technical standards shall take into account the different types of 
investment products. The European Supervisory Authorities shall submit those draft 
regulatory technical standards to the Commission by […]. 

Power is conferred on the Commission to adopt the regulatory technical standards in 
accordance  with  the  procedure  set  out  in  Articles  10  to  14  of  Regulation  (EU)  No 
1093/2010,  Articles  10  to  14  of  Regulation  1094/2010  and  Articles  10  to  14  of 
Regulation (EU) No 1095/2010. 

Article 9 

Marketing  communications  that  contain  specific  information  relating  to  the  investment 
product shall not include any statement that contradicts the information contained in the key 
information  document  or  diminishes  the  significance  of  the  key  information  document. 
Marketing  communications  shall  indicate  that  a  key  information  document  is  available  and 
supply information on how to obtain it.  

1. 

2. 

Article 10 

The investment product manufacturer shall review the  information  contained in the 
key  information  document  regularly  and  revise  the  document  where  the  review 
indicates that changes need to be made.  

The  Commission  shall  be  empowered  to  adopt  delegated  acts  in  accordance  with 
Article 23 laying down detailed rules for the review of the information contained in 
the key information document and the revision of the key information document, as 
regards:  

(a) 

(b) 

(c) 

the conditions and the frequency for reviewing the information contained in the 
key information document; 

the  conditions  under  which  information  contained  in  the  key  information 
document  must  be  revised,  and  under  which  it  is  obligatory  or  optional  to 
republish the revised key information document;  

the  specific  conditions  under  which  information  contained  in  the  key 
information  document  must  be  reviewed  or  the  key  information  document 
revised where an investment product is made available to retail investors in a 
non-continuous manner;  

(d) 

the circumstances in which retail investors are to be informed about a revised 
key information document for an investment product purchased by them. 

Article 11 

1. 

Where  an  investment  product  manufacturer  has  produced  a  key  information 
document  which  does  not  comply  with  the  requirements  of  Articles  6,  7  and  8  on 
which a retail investor has relied when making an investment decision, such a retail 

EN 

24 

   EN 

2. 

3. 

1. 

2. 

3. 

4. 

investor may claim from the investment product manufacturer damages for any loss 
caused to that retail investor through the use of the key information document. 

When a retail investor demonstrates a loss resulting from the use of the information 
contained in the key information document, the investment product manufacturer has 
to prove that the key information document has been drawn up in compliance with 
Articles 6, 7 and 8 of this Regulation. 

The distribution of the burden of proof referred to in paragraph 2 shall not be altered 
in  advance  through  an  agreement.  Any  clause  in  such  agreements  in  advance  shall 
not be binding on the retail investor.  

SECTION III 
PROVISION OF THE KEY INFORMATION DOCUMENT 

Article 12 

A person selling an investment product to retail investors shall provide them with the 
key  information  document  in  good  time  before  the  conclusion  of  a  transaction 
relating to the investment product. 

By way of derogation from paragraph 1, a person selling an investment product may 
provide the retail investor with the key information document immediately after the 
conclusion of the transaction where:  

(a) 

(b) 

the  retail  investor  chooses  to  conclude  the  transaction  using  a  means  of 
distance communication where: 

the provision of the key information document in accordance with paragraph 1 
is not possible, and  

(c)  where  the  person  selling  the  investment  product  has  informed  the  retail 

investor of this fact. 

Where successive transactions regarding the same investment product are carried out 
on behalf of a retail investor in accordance with instructions given by that investor to 
the person selling the investment product prior to the first transaction, the obligation 
to provide a key information document under paragraph 1 shall only apply to the first 
transaction.  

The  Commission  shall  be  empowered  to  adopt  delegated  acts  in  accordance  with 
Article 23 specifying:  

(a) 

(b) 

the  conditions  for  fulfilling  the  requirement  to  provide  the  key  information 
document in good time as laid down in paragraph 1; 

the  method  and  the  time  limit  for  the  provision  of  the  key  information 
document in accordance with paragraph 2. 

EN 

25 

   EN 

1. 

2. 

3. 

4. 

5. 

Article 13 

The  person  selling  an  investment  product  shall  provide  the  key  information 
document to retail investors free of charge.  

The  person  selling  an  investment  product  shall  provide  the  key  information 
document to the retail investor in one of the following media:  

(a)  on paper;  

(b)  using  a  durable  medium  other  than  paper,  where  the  conditions  laid  down  in 

paragraph 4 are met; or 

(c)  by means of a website where the conditions laid down in paragraph 5 are met. 

However, where the key information document is provided using a durable medium 
other than paper or by means of a website, a paper copy shall be provided to retail 
investors upon request and free of charge.  

The key information document may be provided using a durable medium other than 
paper if the following conditions are met:  

(a) 

the  use  of  the  durable  medium  is  appropriate  in  the  context  of  the  business 
conducted  between  the  person  selling  an  investment  product  and  the  retail 
investor; and  

(b) 

the retail investor has been given the choice between information on paper and 
in the durable medium, and has chosen that other medium. 

The key information document may be provided by the means of a website if the key 
information  document  is  addressed  personally  to  the  retail  investor  or  if  the 
following conditions are met:  

(a) 

(b) 

(c) 

the  provision  of  the  key  information  document  by  means  of  a  website  is 
appropriate in the context of the business conducted between the person selling 
an investment product and the retail investor;  

the  retail  investor  has  consented  to  the  provision  of  the  key  information 
document by means of a website; 

the retail investor has been notified electronically of the address of the website, 
and  the  place  on  the  website  where  the  key  information  document  can  be 
accessed; 

(d)  where  the  key  information  document  has  been  revised  in  accordance  with 
Article  10  all  revised  versions  shall  also  be  made  available  to  the  retail 
investor; 

(e) 

it  is  ensured  that  the  key  information  document  remains  accessible  on  the 
website  for  such  period  of  time  as  the  retail  investor  may  reasonably  need  to 
consult it. 

EN 

26 

   EN 

6. 

For the purposes of paragraph 4 and 5, the provision of information using a durable 
medium other than paper or by means of a website shall be regarded as appropriate in 
the  context  of  the  business  conducted  between  the  person  selling  an  investment 
product and the retail investor, if there is evidence that the retail investor has regular 
access to the Internet. The provision by the retail investor of an e-mail address for the 
purposes of that business shall be regarded as such evidence. 

CHAPTER III 
COMPLAINTS, REDRESS, COOPERATION  

Article 14 

The investment product manufacturer shall establish appropriate procedures and arrangements 
which  ensure  that  retail  investors  who  have  submitted  a  complaint  in  relation  to  the  key 
information document receive a substantive reply in a timely and proper manner.  

Article 15 

1. 

Where  a  retail  investor  initiates  a  procedure  for  alternative  dispute  resolution  laid 
down in national law against an investment product manufacturer or a person selling 
investment  products  with  regard  to  a  dispute  concerning  rights  and  obligations 
established under this Regulation, the investment product manufacturer or the person 
selling investment products shall participate in that procedure, provided that it fulfils 
the following requirements: 

(a) 

the procedure results in decisions which are not binding;  

(b) 

(c) 

(d) 

(e) 

(f) 

the limitation period for bringing the dispute before a court is suspended for the 
duration of the procedure for alternative dispute resolution; 

the  period  of  prescription  of  the  claim  is  suspended  for  the  duration  of  the 
procedure; 

the  procedure  is  free  of  charge  or  at  moderate  cost,  as  specified  in  national 
legislation;  

electronic means are not the only means by which the parties can gain access to 
the procedure; 

interim  measures  are  possible  in  exceptional  cases  where  the  urgency  of  the 
situation so requires. 

2. 

Member States shall notify the Commission of the entities with competence to deal 
with the procedures referred to in paragraph 1 by [insert concrete date 6 months after 
entry  into  force/application  of  this  Regulation].  They  shall  notify  the  Commission 
without delay of any subsequent change concerning those entities.  

EN 

27 

   EN 

3. 

Entities with competence to deal with the procedures referred to in paragraph 1 shall 
cooperate  with  each  other  on  the  resolution  of  cross-border  disputes  arising  under 
this Regulation. 

Article 16 

For  the  purposes  of  the  application  of  this  Regulation  the  competent  authorities  shall 
cooperate  with  each  other  and  with  the  entities  responsible  for  out-of-court  complaint  and 
redress procedures referred to in Article 15.  

In  particular,  the  competent  authorities  shall,  without  undue  delay,  provide  each  other  with 
such  information  as  is  relevant  for  the  purposes  of  carrying  out  their  duties  under  this 
Regulation. 

1. 

2. 

1. 

2. 

Article 17 

Member  States  shall  apply  Directive  94/46/EC  to  the  processing  of  personal  data 
carried out in that Member State pursuant to this Regulation. 

Regulation  EC  No  45/2001  of  the  European  Parliament  and  of  the  Council  shall 
apply to the processing of personal data carried out by EBA, EIOPA and ESMA. 

CHAPTER IV 
ADMINSTRATIVE SANCTIONS AND MEASURES  

Article 18 

Member States shall lay down rules establishing appropriate administrative sanctions 
and measures to be applied to situations which constitute a breach of the provisions 
of  this  Regulation  and  shall  take  all  necessary  measures  to  ensure  that  they  are 
implemented.  Those  sanctions  and  measures  shall  be  effective,  proportionate  and 
dissuasive.  

By  [24  months  after  entry  into  force  of  this  Regulation]  the  Member  States  shall 
notify  the  rules  referred  to  in  the  first  subparagraph  to  the  Commission  and  to  the 
Joint  Committee  of  the  European  Supervisory  Authorities.  They  shall  notify  the 
Commission  and  the  Joint  Committee  of  the  European  Supervisory  Authorities 
without delay of any subsequent amendment thereto. 

In  the  exercise  of  their  powers  in  Article  19,  competent  authorities  shall  cooperate 
closely to ensure that the administrative measures and sanctions produce the desired 
results  of  this  Regulation  and  coordinate  their  action  in  order  to  avoid  possible 
duplication  and  overlap  when  applying  administrative  measures  and  sanctions  to 
cross border cases.  

EN 

28 

   EN 

1. 

This Article applies to the following breaches:  

Article 19 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

the  key  information  document  does  not  comply  with  Article  6  (1)  to  (3)  and 
Article 7; 

the  key  information  document  does  not  contain  the  information  set  out  in 
Article 8 (1) and (2) or is not presented in in accordance with Article 8 (4);  

a  marketing  communication  contains  information  relating  to  the  investment 
product  that  contradicts  the  information  in  the  key  information  document,  in 
breach of Article 9; 

the key information document is not reviewed and revised in accordance with 
Article 10; 

the  key  information  document  has  not  been  provided  in  good  time  in 
accordance with Article 12 (1); 

the  key  information  document  has  not  been  provided  free  of  charge  in 
accordance with Article 13 (1). 

2. 

Member States shall ensure that the competent authorities have the power to impose 
at least the following administrative measures and sanctions:  

(a) 

an order prohibiting the marketing of an investment product; 

(b) 

an order suspending the marketing of an investment product; 

(c) 

a  warning,  which  is  made  public  and  which  identifies  the  person  responsible 
and the nature of the breach; 

(d) 

an order for the publication of a new version of a key information document. 

3. 

Member States shall ensure that, where the competent authorities have imposed one 
or more administrative measures and sanctions in accordance with paragraph 2, the 
competent  authorities  have  the  power  to  issue  or  require  the  investment  product 
manufacturer  or  person  selling 
issue  a  direct 
communication  to  the  retail  investor  concerned,  giving  them  information  about  the 
administrative  measure  or  sanction,  and  informing  them  where  to  lodge  complaints 
or submit claims for redress. 

investment  product 

the 

to 

The competent authorities shall apply the administrative measures and sanctions referred to in 
Article 19(2) taking into account all relevant circumstances including:  

Article 20 

(a) 

the gravity and the duration of the breach;  

(b) 

the degree of responsibility of the responsible person;  

EN 

29 

   EN 

(c) 

the impact of the breach on retail investors' interests; 

(d) 

the cooperative behaviour of the person responsible for the breach; 

(e) 

any previous breaches by the responsible person. 

Article 21 

1. 

2. 

Where the competent authority has disclosed administrative measures and sanctions 
to  the  public,  it  shall  simultaneously  report  those  administrative  measures  and 
sanctions to EBA, EIOPA and ESMA. 

The  Member  States  shall  once  a  year  provide  EBA,  EIOPA  and  ESMA  with 
aggregate  information  regarding  all  administrative  measures  and  sanctions  imposed 
in accordance with Articles 18 and 19(2).  

3. 

EBA, ESMA and EIOPA shall publish this information in an annual report.  

Article 22 

Sanctions  and  measures  imposed  for  the  breaches  referred  to  in  Article  19(1)  shall  be 
disclosed  to  the  public  without  undue  delay  including  at  least  information  on  the  type  of 
breach of  this Regulation and the identity of those responsible  for  it,  unless  such disclosure 
would seriously jeopardise the financial markets. 

Where  a  publication  would  cause  a  disproportionate  damage  to  the  parties  involved,  the 
competent authorities shall publish the sanctions or measures on an anonymous basis.  

CHAPTER IV 
FINAL PROVISIONS 

Article 23 

1. 

2. 

3. 

The  power  to  adopt  delegated  acts  is  conferred  on  the  Commission  subject  to  the 
conditions laid down in this Article.  

The power to adopt delegated acts referred to in Articles 8(5), 10(2) and 12(4) shall 
be conferred on the Commission for a period of [4 years] from the entry into force of 
this Regulation. The delegation of power shall be tacitly extended for periods of an 
identical  duration,  unless  the  European  Parliament  or  the  Council  opposes  such 
extension not later than three months before the end of each period.  

The  delegation  of  powers  referred  to  in  Articles  8(5),  10(2)  and  12(4)  may  be 
revoked  at  any  time  by  the  European  Parliament  or  by  the  Council.  A  decision  of 
revocation shall put an end to the delegation of the power specified in that decision. 
It  shall  take  effect  the  day  following  the  publication  of  the  decision  in  the  Official 
Journal of the European Union or at a later date specified therein. It shall not affect 
the validity of any delegated acts already in force.  

EN 

30 

   EN 

4. 

5. 

As soon as it adopts a delegated act, the Commission shall notify it simultaneously to 
the European Parliament and to the Council.  

A  delegated  act  adopted  pursuant  to  Articles  8(5),  10(2)  and  12(4)  shall  enter  into 
force only if no objection has been expressed either by the European Parliament or 
the Council within a period of 2 months of  notification of that act to the European 
Parliament  and  the  Council  or  if,  before  the  expiry  of  that  period,  the  European 
Parliament  and  the  Council  have  both  informed  the  Commission  that  they  will  not 
object. That period shall be extended by [2 months] at the initiative of the European 
Parliament or the Council. 

Article 24 

Management companies and investment companies referred to under Article 2 (1) and Article 
27 of Directive 2009/65/EC and persons selling units of UCITS as defined in Article 1 (2) of 
that Directive are exempt from the obligations under this Regulation until [OJ: please insert 
the date 5 years after the entry into force].  

Article 25 

1. 

Four years after the date of entry into force of this Regulation, the Commission shall 
review  this  Regulation.  The  review  shall  include  a  general  survey  of  the  practical 
application  of  the  rules  laid  down  in  this  Regulation,  taking  due  account  of 
developments  in  the  market  for  retail  investment  products.  As  regards  UCITS  as 
defined in Article 1 (2) of Directive 2009/65/EC, the review shall assess whether the 
transitional arrangements under Article 24 of this Regulation shall be prolonged, or 
whether, following the identification of any necessary adjustments, the provisions on 
key  investor  information  in  Directive  2009/65/EC  might  be  replaced  by  or 
considered  equivalent  to  the  key  investor  document  under  this  Regulation.  The 
review  shall  also  reflect  on  a  possible  extension  of  the  scope  of  this  Regulation  to 
other financial products. 

2. 

After  consulting  the  Joint  Committee  of  the  European  Supervisory  Authorities,  the 
Commission  shall  submit  a  report  to  the  European  Parliament  and  the  Council, 
accompanied, if appropriate, by a legislative proposal.  

Article 26 

This Regulation shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union.  

It shall apply from [two years after its entry into force]. 

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This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Strasbourg,  

For the European Parliament 
The President 

For the Council 
The President 

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