PRIIPs progress update

You may have read in the press that on Wednesday (14 September), the EU Parliament adopted the Resolution proposed by the ECON Committee objecting to the Level 2 PRIIPs KID RTS. So far, there has been no statement by either of the EU Commission or the European Supervisory Authorities (ESAs) as to how the Commission will respond. This appears to leave the industry in limbo. 

What we have to go on so far is a Daily Telegraph report, saying that The Commission will continue to target the start of 2017 for the rule change "for the sake of consumer protection". Also, Silverfinch said that they had heard from "sources in the EU Commission" that they intend to have a revised draft ready for another parliamentary vote in October.

Perhaps mostly significantly Sven Giegold, MEP, and a leading critic of the RTS in ECON, has said "After today's vote, we will maintain close contact with the Commission to help finding solutions which contribute to a swift revision of the PRIIPs implementation rules."

Although the Commission could either press ahead with Level 1 without Level 2, or delay both Level 1 and Level 2, the quotes above seem to indicate that the Commission will work quickly, together with ECON, to produce a revised RTS soon and to get the required approvals from the Parliament and Council quickly (as for the 'quick fix' implementation of amendments to MiFID II earlier this year). It is therefore possible that the revised RTS will be in place by 31 December 2016, as currently planned and without the need for a change to the Level 1 Regulations. This would fully comply with the Parliament's Resolution regarding timing.

So, we remain of the opinion that

• There is no need for a complete rewrite of the RTS and no reduction in the work required. Instead, extra paragraphs will be added to the RTS requiring extra warnings and possibly more calculations
• There will be no need for the revised RTS to be re-exposed to industry comment
• Some of ECON's less substantive objections will be addressed in Level 3 guidance or questions and answers.

Companies should therefore:

• Be scoping the work involved assuming no reduction in the work required due to changes to the RTS. This should be running now
• Examine in particular all fund links to see how difficult their KIDs will be to produce. Our gross estimate is that around 90% will be simple but around 10% will need more complex calculations
• Start work on modelling at least all participating products and structured products now
• Monitor industry developments around standardisation of data provision by fund managers
• Be wary of the costs of sourcing data from some commercial providers when timescales for compliance are stressed and, instead, start talking to fund managers directly about delivery of data
• Ask fund managers and data providers to deliver the CEPT data and not just the European PRIIPs Template data unless you are prepared to adopt the Recommended Holding Periods selected by the fund manager

For assistance from Willis Towers Watson, which has been following the PRIIPS developments closely, please contact:

Marcus Granstedt
Willis Towers Watson
Tel: 08-506 417 77

Mail: marcus.granstedt@willistowerswatson.com