<img src="https://secure.leadforensics.com/29321.png" style="display:none;">


Recommended Blogs

How to communicate compliantly with an ageing population
September’s Regulation Round-up, a monthly update from the Financial Conduct Authority, has as its hot topic on how to communicate compliantly with an ageing population. For some time now, the regulator has been concerned about the changing demographic – the growth in the number of older people and...
Make your FCA visit a success: why working with Marketing is key
So the Financial Conduct Authority has announced that it plans to visit your firm. We’re willing to bet that your Marketing team aren’t the first people you think of when it comes to preparation. But they can be vital to success. Here we outline the 6 reasons why. Why is the Financial Conduct...
How to write Compliance-ready content first time
  This stressful scenario is only-too familiar… You desperately need to get out that last-minute financial promotion You’re up against the clock – but you’ve drafted some content that’s been signed off by the business You’re nearly there…and then Compliance steps in And their amendments mean it’s...

FCA shares industry’s concerns about PRIIPs requirements

Steve Coleman


In a speech last month, FCA chief executive Andrew Bailey admitted to having concerns about the requirements of the PRIIPs legislation.

What is PRIIPs?

The packaged retail and insurance-based investment products (PRIIPs) regulations came into force on 1 January this year.

You can read more here about what PRIIPs is and how to comply.

The regulation applies to a wide range of firms including banks, insurers, and investment managers; its aim is to extend the standards of consumer protection introduced by MiFID II to insurance-based investment products.

One of its core requirements is the need for investment companies to produce a Key Information Document (KID) if they want to sell to retail investors.

Via the KID, fund managers have to provide details on how they expect funds to perform in various market conditions. The document has a highly-prescriptive format; its aim is to make it easier for investors to compare the features, risks and rewards of products, and as a result make more informed decisions.

What are the problems with the PRIIPs and KID requirements?

Andrew Bailey is far from the first or only person to flag some of the issues with PRIIPs.

We highlighted in February – a month after the new legislation came into effect – that concerns about PRIIPs and the KID requirements were continuing to make headlines.

We’ve also identified some of the pitfalls you face when preparing your PRIIPs communications, and how to avoid them.

In his speech, Bailey said that he is concerned about the impact of the new rules on the European funds industry.

He believes the problems are:

  1. A risk that the legislation carries ‘a risk that it is leading to literally accurate disclosure which is not providing useful context’

  2. The withdrawal from Europe of funds domiciled elsewhere – the US, for example – to avoid the burden imposed by the regulation

  3. Concerns about the performance projections included

The FCA issued a statement in January that aimed to clarify expectations on KIDs. Bailey’s speech, however, suggest that more may need to be done to address firms’ and the regulator’s concerns.

What will the FCA do to tackle PRIIPs concerns?

In his speech, Bailey said that:

‘We will continue to engage with firms and their trade associations to consider how their concerns may be resolved so that investors get the full benefit of the regulation. We will also continue to work with the European Supervisory Authorities, and contribute to the European Commission’s post-implementation review of the PRIIPs regulation.’

What can you do to make sure your communications comply?

While the regulator and others continue to raise concerns about the feasibility, effectiveness and accuracy of KIDs and the PRIIPs legislation, Marketing and Compliance teams have to ensure their communications meet the current requirements.

You can do this by:

  • Ensuring you follow FCA rules on prominence in terms of risk warnings, disclaimers and disclosures
  • Familiarising yourself with the FCA’s objectives around desired consumer outcomes and making sure your documents achieve them

Following the FCA’s long-standing guidance on Treating Customers Fairly will give you a head start when it comes to preparing user-friendly, compliant client documents.

If you want to read more on how you can meet the FCA’s expectations on Treating Customers Fairly, our TCF FAQs will be a useful read. They include information and tips on:

  • What the TCF rules comprise
  • Expectations of firms
  • Evidencing TCF (management information)
  • Getting the culture right
  • Rules for providers and distributors

The FAQs are free and you can read them here.

How does TCF affect financial promotions?

Topics: Compliance

Subscribe to our weekly blog

Tips and best practice for Compliance teams, along with the latest news and views.

  • 2018-05-18 14:20:31 New ICO guidance on GDPR consent: how to comply


    Learn More
  • 2018-05-11 15:27:43 FCA shares industry’s concerns about PRIIPs requirements

     In a speech last month, FCA chief executive Andrew Bailey admitted to having concerns about the requirements of the PRIIPs legislation.

    Learn More
  • 2018-05-04 14:30:48 DotApprove upgrade brings significant benefits to Compliance teams

     In April, Perivan Technology released the latest, upgraded version of our DotApprove platform. Here we look at the new features, and the benefits they bring to DotApprove’s Compliance users.

    Learn More