European Commission approves PRIIPs delay

The European Commission has approved a one-year delay to legislation that will affect alternative investment fund managers with high net worth investors.

The Packaged Retail and Insurance-based Investment Products regulation will now enter into force on 31 December 2017, with a revised framework for the legislation expected to be put in place during the first half of next year.

It has been delayed as there are no official guidelines for compliance with the regulation because they were overwhelmingly rejected by the European Parliament in September.

European Supervisory Agents are now working on revised guidelines, which they must present to the commission within six weeks.

Under the regulation, every packaged product providing exposure to an underlying instrument sold to retail investors must have an accompanying key information document (KID). The purpose of this is to allow investors to compare products.

Alternative investment firms whose clients include high net worth individuals will have to prepare KIDs because such investors qualify as retail investors under the Markets in Financial Instruments Directive.

Those firms whose funds are sold through life insurance policies to retail investors will also be affected, but to a lesser extent; managers of these funds will have to provide risk, performance and cost data to insurance companies which will then be responsible for producing the KID.