The deadline for firms to produce the required documents to market Packaged Retail and Insurance Based Products (PRIIPs) is “seemingly unattainable” for the majority of firms, research by KNEIP shows.
Earlier this month, the European Securities and Markets Authority (ESMA) published the final technical standards for the Key Investor Information Document (KID) required to market PRIIPs in Europe. The implementation deadline is December 31.
Research carried out by KNEIP, a financial data and reporting firm, shows that 95 per cent of firms are worried about producing the investor documents in the nine-month period.
KNEIP led workgroups for 110 asset managers, insurers and banks in London, Luxembourg and Frankfurt, which contributed to the findings.
Mario Mantrisi, senior adviser to the CEO at KNEIP, says: “The timeframe was a sizeable challenge from the beginning. However, with the release of the level II RTS, which varies considerably from the initial issued guidelines in several areas, the timeframe has become for many a seemingly unattainable objective.”
Aside from the timeframe, the biggest hurdle in the latest requirements for 38 per cent of the participants was the ‘future performance’ testing scenario, followed by ongoing fee disclosures which were a major concern for 30 per cent, and the calculation of risk indicators which were the main issue for 19 per cent.
Mantrisi adds: “The latest standards for the PRIIPs KID has retained the calculation of future performance scenarios, where fund managers must provide information on how the product might perform in various future circumstances. This has proven a challenge for the industry, as previously information was only required on past performance scenarios.
“There is no doubt that these challenges are creating a considerable amount of head scratching for the companies that we work with on preparation for PRIIPs. However, the reality is that it is unlikely that the deadline will move. This means that in many circumstances, fund managers will have to provide this information by the end of 2016, and will benefit most now from concentrating their energy on finding pragmatic ways of doing whatever it takes to meet the deadline.”