Friday, 15 February 2019

Insurers and asset managers call for expiry date of PRIIPs derogation for multi-option products to be aligned with end of UCITS exemption

Insurance Europe and the European Fund and Asset Management Association (EFAMA) have written a joint letter to the European Commission and the European Insurance and Occupational Pensions Authority (EIOPA) saying that current rules allowing the use of information documents prepared under the UCITS Directive for multi-option products (MOPs) under the PRIIPs Regulation must be urgently extended in order to ensure consumers can continue to receive pre-contractual information about these products.
Currently, where the underlying funds of an insurance-based product are UCITS funds or other funds where a UCITS key investor information document (KIID) is produced rather than a PRIIPs KID, the PRIIPs rules allow insurers and asset managers to produce a generic PRIIPs KID for the overall product and to provide investors with the existing UCITS KIID for each of the underlying funds.
This rule was linked to the temporary exemption of UCITS from the PRIIPs Regulation, which was due to expire in December 2019. However, a recent agreement between the EU institutions has extended this exemption – but, the rules on disclosure will still expire in December 2019.
This will create a significant compliance burden for insurers and asset managers, who will need to produce entirely new data to populate the PRIIPs KID. In addition, where the data can simply not be produced, the range of products offered to consumers will ultimately decrease.
Therefore, Insurance Europe and EFAMA called for the necessary legislation to extend these rules to be adopted prior to the European elections in May.

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