Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) No 1286/2014 of the European Parliament and of the Council on key information documents for packaged retail and insurance-based investment products as regards the date of its application
Date: 2016-11-09
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: consumer information, financial services, insurance, regulation of investments, technical standard

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   EUROPEAN COMMISSION  Brussels, 9.11.2016  COM(2016) 709 final 2016/0355 (COD)   Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) No 1286/2014 of the European Parliament and of the Council on key information documents for packaged retail and insurance-based investment products as regards the date of its application (Text with EEA relevance)  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

Reasons for the proposal 

Regulation (EU) No 1286/2014 was adopted on 26 of November 2014 with the objective of 
increasing the protection of retail investors investing in packaged retail and insurance-based 
investment products (PRIIPs). It also aims to restore consumer trust in the financial services 
industry after the financial crisis.  

In  order  to  fulfil  these  objectives,  Regulation  (EU)  No  1286/2014  requires  that  PRIIPs 
manufacturers comply with a uniform set of product disclosure requirements and that retail 
investors receive the key information document (KID) on the offered PRIIPs. The disclosed 
information should enable the retail investors to better understand the economic nature and 
risks of a particular product and to allow for comparison between different offers. Moreover, 
greater  transparency  and  harmonization  will  also  benefit  the  internal  market  in  financial 
services by creating a level playing field among different products and distribution channels.  

Regulation  (EU)  No  1286/2014  sets  the  form  and  content  of  the  KID.  In  order  to  further 
standardise various features of the KID and to take account of important differences among 
types  of  PRIIPs,  the  European  Supervisory  Authorities  ('ESAs':  European  Insurance  and 
Occupational Pensions Authority, European Banking Authority and European Securities and 
Markets  Authority)  are  tasked  with  the  preparation  of  regulatory  technical  standards  (RTS) 
specifying the presentation and the content of the KID, the standardised format of the KID, 
the  methodology  underpinning  the  presentation  of  risk  and  reward  and  the  calculation  of 
costs,  as  well  as  the  conditions  and  the  minimum  frequency  for  reviewing  the  information 
contained in the KID and the conditions on fulfilling the requirement to provide the KID to 
retail investors. 

On  6  April  2016,  the  ESAs  jointly  submitted  the  draft  RTS  on  the  KID  for  PRIIPs  to  the 
Commission. The draft RTS were endorsed by the Commission on 30 June 2016 by adopting 
the Delegated Regulation on KID1. 

During  the  scrutiny  period,  the  Council  raised  no  objections  to  the  Commission  Delegated 
Regulation.  However,  on  14  September  2016,  the  European  Parliament  rejected  it2.  The 
European  Parliament  called  on  the  Commission  to  review  the  provisions  relating  to  multi-
option  PRIIPs,  performance  scenarios  and  comprehension  alert.  Moreover,  the  European 
Parliament and a large majority of Member States asked the Commission to defer the date of 
application  of  Regulation  (EU)  No  1286/2014,  arguing  that  the  absence  of  the  technical 
standards would hinder the smooth application of that Regulation. 

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C(2016) 3999 final. 
European Parliament Resolution of 14 September 2016 on the Commission delegated regulation of 30 
June  2016  supplementing  Regulation  (EU)  No  1286/2014  of  the  European  Parliament  and  of  the 
Council  on  key  information  documents  for  packaged  retail  and  insurance-based  investment  products 
(PRIIPs) by laying down regulatory technical standards with regard to the presentation, content, review 
and revision of key information documents and the conditions for fulfilling the requirement to provide 
such documents (C(2016)03999 – 2016/2816(DEA)). 

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Regulation (EU) No 1286/2014 is directly applicable as of 31 December 2016 and it does not 
link the production of a KID to the adoption of the delegated act. While the provisions of the 
Regulation could be applied by PRIIPs manufacturers and enforced by competent authorities 
without the adoption of the Delegated Regulation, it is desirable to provide as much clarity as 
possible on the technical standards specifying the content of certain rules. 

Given the exceptional circumstances that have led to delays in the adoption of the Delegated 
Regulation, the Commission proposes to defer the date of application of Regulation (EU) No 
1286/2014 by 12 months in order to reduce legal uncertainty and give more time to PRIIPs 
manufacturers to prepare for the application of the new rules.  

Length of the deferral 

A  deferral  of  twelve  months  should  provide  sufficient  time  for  competent  authorities  and 
PRIIPs manufacturers to be able to comply with those new rules.  

2. 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

This  Proposal  is  based  on  Article  114  of  the  TFEU  as  is  Regulation  (EU)  No  1286/2014, 
which this proposal seeks to amend.   

Subsidiarity (for non-exclusive competence)  

According to the principle of subsidiarity, Union action may only be taken if the envisaged 
aims  cannot  be  achieved  by  Member  States  alone.  Union  intervention is  needed  to  remove 
barriers  to  an  internal  market  in  financial  services  and  products  introducing  a  uniform 
approach  to  the  disclosures  relating  to  PRIIPs.  In  this  regard,  the  legislation  that  is  being 
amended is adopted in full compliance with the principle of subsidiarity and any amendment 
thereto must be made through a Commission proposal. 

Proportionality 

This  Union  action  is  necessary  to  achieve  the  objective  of  the  effective  application  of  the 
PRIIPs rules by the competent authorities and the PRIIPs manufacturers. This proposal will 
therefore ensure that the objectives pursued by Regulation (EU) No 1286/2014 are achieved 
across  the  internal  market  ensuring  a  high  level  of  market  transparency  and  retail  investor 
protection. 

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3. 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

This proposal is not accompanied by a separate impact assessment, as an impact assessment 
for Regulation (EU) No 1286/2014 has been already produced. This proposal does not alter 
substance  of  the  Regulation  and  does  not  create  new  obligations  for  market  participants 
covered by its scope. It only concerns an extension of the date of application of Regulation 
(EU)  No  1286/2014  by  12  months  in  order  to  ensure  legal  certainty  for  the  industry  also 
allowing it and the competent authorities to prepare for the new rules. 

4. 

BUDGETARY IMPLICATIONS 

The proposal does not have a budgetary impact for the European Commission. 

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2016/0355 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EU) No 1286/2014 of the European Parliament and of the Council 
on key information documents for packaged retail and insurance-based investment 
products as regards the date of its application 

(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, 

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

Having regard to the opinion of the European Central Bank, 

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

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

Regulation  (EU)  No  1286/2014  of  the  European  Parliament  and  of  the  Council3 
introduced a series of measures aimed at enhancing investor protection and rebuilding 
consumer  trust  in  the  financial  services  industry  by  increasing  transparency  in  the 
retail  investment  market.  It  requires  manufacturers  of  packaged  retail  and  insurance-
based investment products (PRIIPs) to produce a Key Information Document (KID). 

Regulation  (EU)  No  1286/2014  empowers  the  European  Supervisory  Authorities  to 
prepare regulatory technical standards specifying the elements of the KID. 
On 30 June 2016, the Commission adopted the Delegated Regulation4 which specifies 
the presentation and the content of the KID, the standardised format of the KID, the 
methodology underpinning the presentation of risk and reward and the calculation of 
costs,  as  well  as  the  conditions  and  the  minimum  frequency  for  reviewing  the 
information  contained  in  the  KID  and  the  conditions  on  fulfilling  the requirement  to 
provide the KID to retail investors. 

(4) 

The  European  Parliament  objected  to  the  Delegated  Regulation  adopted  by  the 
Commission  on  30  June  2016  and  called,  together  with  a  large  majority  of  Member 
States, for a deferral of the date of application of Regulation (EU) No 1286/2014.  

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Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 
on  key  information  documents  for  packaged  retail  and  insurance-based  investment  products  (PRIIPs) 
(OJ L 352, 9.12.2014, p. 1). 
C(2016) 3999 final. 

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(5) 

(6) 

(7) 

A deferral of twelve months will give additional time for those concerned to adhere to 
the new requirements. In the light of these exceptional circumstances, it is appropriate 
and justified that Regulation (EU) No 1286/2014 is amended accordingly.  

Given  the  very  short  period  of  time  left  before the  application  of  the  provisions laid 
down  in  Regulation  (EU)  No  1286/2014,  this  Regulation  should  enter  into  force 
without delay.  

Consequently,  it  is  also  justified  to  apply  in  this  case  the  exception  for  urgent  cases 
provided for in Article 4 of Protocol (No 1) on the role of national Parliaments in the 
European Union. 

HAVE ADOPTED THIS REGULATION: 

In  Regulation  (EU)  No  1286/2014,  the  second  paragraph  of  Article  34  is  replaced  by  the 
following: 

Article 1 

'It shall apply from 1 January 2018'. 

Article 2 

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

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

Done at Brussels, 

For the European Parliament 
The President 
Martin Schulz 

For the Council 
The President 

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