On 1 October 2018, the European Supervisory Authorities (ESA) issued a statement addressing market concerns regarding the end of the UCITS exemption on 1 January 2020. UCITS producing a UCITS key investor information document (KIID) under the UCITS Directive are currently exempted from producing a PRIIPs key information document (KID) for their product.
Background
Under the current exemption regime of the PRIIP regulation, UCITS producing a KIID are not required to additionally produce a PRIIP KID. This exemption will expire 31 December 2019, unless legislative action is taken.
As of 1 January 2020, retail funds would be required to simultaneously produce a UCITS KIID and PRIIP KID. Due to their difference in calculation methodology, including the presentation of risk, performance, and cost, this could contribute to significant confusion among investors.
Thus, the prevention of providing duplicate information through a UCITS KIID and a PRIIP KID is a key objective of the ESAs.
Key message and business impact
The review of the PRIIP regulation will likely not to be completed in time before the UCITS exemption expires. As such, ESA plans to submit proposed amendments for the technical standards by Q1 2019.
If the exemption for UCITS KIIDs is not extended from the PRIIP regulation, all UCITS will have to produce a PRIIP KID as of 1 January 2020. This obligation will be in addition to the provision of a UCITS KIID.
Next steps
Monitoring of the first findings of the PRIIP revision process and participation in the public consultation expected for Q4 2018 is recommended.
This will enable swift adaptation to potential changes and to prepare for the projected end of the UCITS exemption of 1 January 2020.
Let us assist you in ensuring that your internal frameworks are aligned to both UCITS and PRIIP and assist you in optimising all synergies, through a high-level impact assessment, a gap assessment, and implementation support.
The full statement of the European Supervisory Authorities can be found here.
