General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
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

EP Resolution on Proposal for Sovereign Bond Backed Securities

The European Parliament (EP) published adopted text on the proposal for a regulation of the European Parliament and of the Council on sovereign bond-backed securities (SBBS).

April 16, 2019 WebPage Regulatory News

FDIC Consults on Approach to Resolution Planning for IDIs

FDIC approved an Advance Notice of Proposed Rulemaking (ANPR) and is seeking comment on ways to tailor and improve its rule requiring certain insured depository institutions (IDIs) to submit resolution plans.

April 16, 2019 WebPage Regulatory News

HKMA Decides to Maintain Countercyclical Capital Buffer at 2.5%

HKMA announced that, in accordance with the Banking (Capital) Rules, the countercyclical capital buffer (CCyB) ratio for Hong Kong remains at 2.5%.

April 16, 2019 WebPage Regulatory News

EP Approves Agreement on Package of CRD 5, CRR 2, BRRD 2, and SRMR 2

The European Parliament (EP) approved the final agreement on a package of reforms proposed by EC to strengthen the resilience and resolvability of European banks.

April 16, 2019 WebPage Regulatory News

PRA Seeks Input and Issues Specifications for Insurance Stress Tests

PRA announced that it will conduct an insurance stress test for the largest regulated life and general insurers from July to September 2019.

April 15, 2019 WebPage Regulatory News

PRA Finalizes Policy on Approach to Managing Climate Change Risks

PRA published the policy statement PS11/19, which contains final supervisory statement (SS3/19) on enhancing banks’ and insurers’ approaches to managing the financial risks from climate change (Appendix).

April 15, 2019 WebPage Regulatory News

EC Launches Pilot Phase on Implementation of Ethical Guidelines for AI

EC launched a pilot phase to ensure that ethical guidelines for the development and use of artificial intelligence, or AI, can be implemented in practice.

April 15, 2019 WebPage Regulatory News

EBA Single Rulebook Q&A: First Update for April 2019

EBA published answers to nine questions under the Single Rulebook question and answer (Q&A) updates for this week.

April 12, 2019 WebPage Regulatory News

EIOPA Statement on Application of Proportionality in SCR Supervision

EIOPA published a supervisory statement on the application of proportionality principle in the supervision of the Solvency Capital Requirement (SCR) calculated in accordance with the standard formula.

April 11, 2019 WebPage Regulatory News

FED Updates Form and Supplemental Instructions for FR Y-9C Reporting

FED updated the form and supplemental instructions for FR Y-9C reporting. FR Y-9C is used to collect data from domestic bank holding companies, savings and loan holding companies, U.S intermediate holding companies, and securities holding companies with total consolidated assets of USD 3 billion or more.

April 11, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2920