Earlier this month, and with little fanfare, the EU’s Packaged Retail Investment and Insurance Products (PRIIPs) Regulation came into force. Some ten years in the making, this Regulation has been created with the aim of making the EU’s €10 trillion PRIIPS market more transparent. The Regulation establishes a new requirement for firms to prepare accurate, quality-assured Key Information Documents (KIDs) that can be used by retail investors to understand and compare the main features of the PRIIPs available to them; such as risks, rewards and costs.
However, as is the case with the EU’s Benchmarks Regulation, which also came into force this month, there is potential for firms to overlook PRIIPs compliance as most of their resources go into meeting the Byzantine challenges of MiFID II compliance. This could prove costly: firms that are non-compliant face having their PRIIPs suspended and fines of up to €5 million, or up to 3% of total annual turnover. Firms are therefore challenged to balance their compliance efforts around an ever more burdensome regulatory environment.
When it comes to PRIIPs, another complicating factor is that the goalposts may be set to shift. Earlier in January, the European Fund and Asset Management Association said the figures mandated in the KIDs will fail to achieve the Regulation’s desired outcomes, and could even mean that manufacturers are unable to comply with PRIIP’s basic requirement that investor communications are ‘clear, fair and not misleading’. The EU has scheduled a review of PRIIPs for the end of the year, so if these concerns prove founded, it could be that the reporting requirements of PRIIPs change.
With in-house compliance teams stretched, and uncertainty remaining around the implementation of PRIIPs, firms need to ensure they have put in place an approach to compliance that is low cost, flexible and effective. At RIMES, we believe the best way of achieving these goals is to take a managed service approach to PRIIPS compliance.
These cloud-based services deliver pre-built and pre-tested tools for sourcing, quality-controlling and distributing PRIIPS data; enabling seamless and immediate compliance. Moreover, taken as a managed service, firms can rest assured that their data management and compliance processes adapt immediately to any future changes to the Regulation.
In effect, this approach mitigates the disruption of regulatory compliance, enabling firms to carry out their core operations in the knowledge that their PRIIPs compliance requirements are in the hands of experts.
To receive information about RIMES’ managed data services for PRIIPs compliance, please contact us.
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