Featured Product

    FIN-FSA Issues Thematic Evaluation of KIDs Under PRIIPs Regulation

    February 14, 2019

    FIN-FSA has made a thematic evaluation of key information documents (KIDs) required by packaged retail and insurance-based investment products (PRIIPs) regulation. The requirement to publish a KID when offering PRIIPs to retail investors came into effect from the beginning of 2018. Generally, there have been challenges to some extent in the application of PRIIPs regulation. FIN-FSA has noted these challenges and, in its thematic evaluation, has focused more on the accessibility of KIDs from the perspective of retail investors.

    The objective has been to assess whether KIDs fulfill, in practice, the goals set for retail investors in terms of facilitating informed investment decisions and the comparability of products. The thematic evaluation is based on sampling and on a review and assessment of thematic entities. The thematic evaluation has examined key product groups, such as insurance products, structured investment products, and derivatives. Investment and alternative investment funds are also subject to the PRIIPs regulation, but in their case the transitional period granted to them has generally been exercised. These products have not, therefore, been subject to evaluation.

    In the thematic evaluation, 30 KIDs from different product groups have been taken for closer assessment. Based on the sample of FIN-FSA, the thematic evaluation shows that the objective of PRIIPs regulation for a document that gives the information required to make an informed investment decision and facilitates the comparison of products belonging to different product groups is, in practice, challenging. In terms of product comparability, the clearest benefit brought, in practice, by the PRIIPs regulation, would appear to be the consistency in structure of the  information presented in all product groups. 

    On the basis of the observations by  FIN-FSA, in structured products, for example, a balance must be struck between what the key information is and what information is necessary to make an investment decision. In structured products, the presentation of descriptions relating to the liquidity of products and to premature sale appears to be challenging and, in this area, the product manufacturers have room for improvement. In investment-linked insurance policies, opportunities for comparing products on the basis of KIDs for the insurance wrapper without selecting the actual investment assets and acquainting oneself with information about the assets appears to be quite limited. This is because the KIDs for the insurance wrapper generally appear to provide very little concrete and useful information on, for example, the risks, costs or performance outlook of products.

    FIN-FSA states that it is the responsibility of product manufacturers to ensure that KIDs are of high quality, so that investors read them and are able to use them to make investment decisions. Closer attention should be paid to quality assurance, particularly when using automation or machine generation in preparing KIDs, translating them, or producing information contained in them. The thematic evaluation has not assessed the correct application of the methodology used in determining numbers or values or the accuracy of numbers or values. The thematic evaluation is not of a kind that has comprehensively assessed document-by-document or topic-by-topic whether KIDs have been prepared in the manner required by regulation.

     

    Related Links

    Keywords: Europe, Finland, Insurance, PRIIPS, KID, Thematic Evaluation, Retail Investors, FIN-FSA

    Related Articles
    News

    EC Rule on Contractual Recognition of Write Down and Conversion Powers

    The European Commission (EC) published the Delegated Regulation 2021/1527 with regard to the regulatory technical standards for the contractual recognition of write down and conversion powers.

    September 17, 2021 WebPage Regulatory News
    News

    APRA Issues Further Guidance on Application of Securitization Standard

    The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to provide guidance to authorized deposit-taking institutions on the interpretation of APS 120, the prudential standard on securitization.

    September 16, 2021 WebPage Regulatory News
    News

    SRB Provides Update on Approach to Prior Permissions Regime

    The Single Resolution Board (SRB) published a Communication on the application of regulatory technical standard provisions on prior permission for reducing eligible liabilities instruments as of January 01, 2022.

    September 16, 2021 WebPage Regulatory News
    News

    APRA Publishes FAQs on Capital Treatment of Overseas Subsidiaries

    The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to clarify the regulatory capital treatment of investments in the overseas deposit-taking and insurance subsidiaries.

    September 15, 2021 WebPage Regulatory News
    News

    EBA Finalizes Guidance to Assess Breaches of Large Exposure Limits

    The European Banking Authority (EBA) published the final report on the guidelines specifying the criteria to assess the exceptional cases when institutions exceed the large exposure limits and the time and measures needed for institutions to return to compliance.

    September 15, 2021 WebPage Regulatory News
    News

    PRA Finalizes Changes to Consolidated Prudential Rules Under CRD5/CRR2

    The Prudential Regulation Authority (PRA) issued the policy statement PS20/21, which contains final rules for the application of existing consolidated prudential requirements to financial holding companies and mixed financial holding companies.

    September 15, 2021 WebPage Regulatory News
    News

    EBA Revises Guidelines on Stress Tests of Deposit Guarantee Schemes

    The European Banking Authority (EBA) revised the guidelines on stress tests to be conducted by the national deposit guarantee schemes under the Deposit Guarantee Schemes Directive (DGSD).

    September 15, 2021 WebPage Regulatory News
    News

    Nordea Bank and EIB Sign Agreement to Fund Green Projects in Nordics

    The European Commission (EC) announced that Nordea Bank has signed a guarantee agreement with the European Investment Bank (EIB) Group to support the sustainable transformation of businesses in the Nordics.

    September 15, 2021 WebPage Regulatory News
    News

    HKMA Endorses Industry Guidance to Support LIBOR Transition

    The Hong Kong Monetary Authority (HKMA) issued a circular, for all authorized institutions, to confirm its support of an information note that sets out various options available in the loan market for replacing USD LIBOR with the Secured Overnight Financing Rate (SOFR).

    September 14, 2021 WebPage Regulatory News
    News

    OCC Issues Booklet on Supervision of Problem Banks

    The Office of the Comptroller of the Currency (OCC) issued a new "Problem Bank Supervision" booklet of the Comptroller's Handbook. The booklet covers information on timely identification and rehabilitation of problem banks and their advanced supervision, enforcement, and resolution when conditions warrant.

    September 13, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7481