Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs) (Text with EEA relevance)

CHAPTER I

SUBJECT MATTER, SCOPE AND DEFINITIONS

Article 1

This Regulation lays down uniform rules on the format and content of the key information document to be drawn up by PRIIP manufacturers and on the provision of the key information document to retail investors in order to enable retail investors to understand and compare the key features and risks of the PRIIP.

Article 2

This Regulation shall not apply to the following products:

(a) non-life insurance products as listed in Annex I to Directive 2009/138/EC;

(b) life insurance contracts where the benefits under the contract are payable only on death or in respect of incapacity due to injury, sickness or infirmity;

(c) deposits other than structured deposits as defined in point (43) of Article 4(1) of Directive 2014/65/EU;

(d) securities as referred to in points (b) to (g), (i) and (j) of Article 1(2) of Directive 2003/71/EC;

(e) pension products which, under national law, are recognised as having the primary purpose of providing the investor with an income in retirement and which entitle the investor to certain benefits;

(f) officially recognised occupational pension schemes within the scope of Directive 2003/41/EC of the European Parliament and of the Council (¹) or Directive 2009/138/EC;

(g) individual pension products for which a financial contribution from the employer is required by national law and where the employer or the employee has no choice as to the pension product or provider.

Article 3

Article 4

For the purposes of this Regulation, the following definitions apply:

(1) ‘packaged retail investment product’ or ‘PRIP’ means an investment, including instruments issued by special purpose vehicles as defined in point (26) of Article 13 of Directive 2009/138/EC or securitisation special purpose entities as defined in point (an) of Article 4(1) of the Directive 2011/61/EU of the European Parliament and of the Council (²), where, regardless of the legal form of the investment, the amount repayable to the retail investor is subject to fluctuations because of exposure to reference values or to the performance of one or more assets which are not directly purchased by the retail investor;

(2) ‘insurance-based investment product’ means an insurance product which offers a maturity or surrender value and where that maturity or surrender value is wholly or partially exposed, directly or indirectly, to market fluctuations;

(3) ‘packaged retail and insurance-based investment product’ or ‘PRIIP’ means a product that is one or both of the following: (a) a PRIP; (b) an insurance-based investment product;

(4) ‘packaged retail and insurance-based investment product manufacturer’ or ‘PRIIP manufacturer’ means: (a) any entity that manufactures PRIIPs; (b) any entity that makes changes to an existing PRIIP including, but not limited to, altering its risk and reward profile or the costs associated with an investment in a PRIIP;

(5) ‘person selling a PRIIP’ means a person offering or concluding a PRIIP contract with a retail investor;

(6) ‘retail investor’ means: (a) a retail client as defined in point (11) of Article 4 (1) of Directive 2014/65/EU; (b) a customer within the meaning of Directive 2002/92/EC, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of Directive 2014/65/EU;

(7) ‘durable medium’ means a durable medium as defined in point (m) of Article 2(1) of Directive 2009/65/EC;

(8) ‘competent authorities’ means the national authorities designated by a Member State to supervise the requirements this Regulation places on PRIIP manufacturers and the persons advising on, or selling, the PRIIP.

CHAPTER II

KEY INFORMATION DOCUMENT

SECTION I

Drawing up the key information document

Article 5

SECTION II

Form and content of the key information document

Article 6

The key information document shall be drawn up as a short document written in a concise manner and of a maximum of three sides of A4-sized paper when printed, which promotes comparability. It shall:

(a) be presented and laid out in a way that is easy to read, using characters of readable size;

(b) focus on the key information that retail investors need;

(c) be clearly expressed and written in language and a style that communicate in a way that facilitates the understanding of the information, in particular, in language that is clear, succinct and comprehensible.

Article 7

The translation shall faithfully and accurately reflect the content of the original key information document.

Article 8

The key information document shall be presented in the sequence laid down in paragraphs 2 and 3.

An explanatory statement shall appear directly underneath the title of the key information document. It shall read:

‘This document provides you with key information about this investment product. It is not marketing material. The information is required by law to help you understand the nature, risks, costs, potential gains and losses of this product and to help you compare it with other products.’.

The key information document shall contain the following information:

(a) at the beginning of the document, the name of the PRIIP, the identity and contact details of the PRIIP manufacturer, information about the competent authority of the PRIIP manufacturer and the date of the document;

(b) where applicable, a comprehension alert which shall read: ‘You are about to purchase a product that is not simple and may be difficult to understand.’;

(c) under a section titled ‘What is this product?’, the nature and main features of the PRIIP, including: (i) the type of the PRIIP; (ii) its objectives and the means for achieving them, in particular whether the objectives are achieved by means of direct or indirect exposure to the underlying investment assets, including a description of the underlying instruments or reference values, including a specification of the markets the PRIIP invests in, including, where applicable, specific environmental or social objectives targeted by the product, as well as how the return is determined; (iii) a description of the type of retail investor to whom the PRIIP is intended to be marketed, in particular in terms of the ability to bear investment loss and the investment horizon; (iv) where the PRIIP offers insurance benefits, details of those insurance benefits, including the circumstances that would trigger them; (v) the term of the PRIIP, if known;

(d) under a section titled ‘What are the risks and what could I get in return?’, a brief description of the risk-reward profile comprising the following elements: (i) a summary risk indicator, supplemented by a narrative explanation of that indicator, its main limitations and a narrative explanation of the risks which are materially relevant to the PRIIP and which are not adequately captured by the summary risk indicator; (ii) the possible maximum loss of invested capital, including, information on: — whether the retail investor can lose all invested capital, or — whether the retail investor bears the risk of incurring additional financial commitments or obligations, including contingent liabilities in addition to the capital invested in the PRIIP, and — where applicable, whether the PRIIP includes capital protection against market risk, and the details of its cover and limitations, in particular with respect to the timing of when it applies; (iii) appropriate performance scenarios, and the assumptions made to produce them; (iv) where applicable, information on conditions for returns to retail investors or built-in performance caps; (v) a statement that the tax legislation of the retail investor's home Member State may have an impact on the actual payout;

(e) under a section titled ‘What happens if [the name of the PRIIP manufacturer] is unable to pay out?’, a brief description of whether the related loss is covered by an investor compensation or guarantee scheme and if so, which scheme it is, the name of the guarantor and which risks are covered by the scheme and which are not;

(f) under a section titled ‘What are the costs?’, the costs associated with an investment in the PRIIP, comprising both direct and indirect costs to be borne by the retail investor, including one-off and recurring costs, presented by means of summary indicators of these costs and, to ensure comparability, total aggregate costs expressed in monetary and percentage terms, to show the compound effects of the total costs on the investment. The key information document shall include a clear indication that advisors, distributors or any other person advising on, or selling, the PRIIP will provide information detailing any cost of distribution that is not already included in the costs specified above, so as to enable the retail investor to understand the cumulative effect that these aggregate costs have on the return of the investment;

(g) under a section titled ‘How long should I hold it and can I take money out early?’ (i) where applicable, whether there is a cooling off period or cancellation period for the PRIIP; (ii) an indication of the recommended and, where applicable, required minimum holding period; (iii) the ability to make, and the conditions for, any disinvestments before maturity, including all applicable fees and penalties, having regard to the risk and reward profile of the PRIIP and the market evolution it targets; (iv) information about the potential consequences of cashing in before the end of the term or recommended holding period, such as the loss of capital protection or additional contingent fees;

(h) under a section titled ‘How can I complain?’, information about how and to whom a retail investor can make a complaint about the product or the conduct of the PRIIP manufacturer or a person advising on, or selling, the product;

(i) under a section titled ‘Other relevant information’, a brief indication of any additional information documents to be provided to the retail investor at the pre-contractual and/or the post-contractual stage, excluding any marketing material.

In order to ensure consistent application of this Article, the ESAs shall, through the Joint Committee of the European Supervisory Authorities (‘Joint Committee’), develop draft regulatory technical standards specifying:

(a) the details of the presentation and the content of each of the elements of information referred to in paragraph 3;

(b) the methodology underpinning the presentation of risk and reward as referred to in points (d) (i) and (iii) of paragraph 3; and

(c) the methodology for the calculation of costs, including the specification of summary indicators, as referred to in point (f) of paragraph 3.

When developing the draft regulatory technical standards the ESAs shall take into account the various types of PRIIPs, the differences between them and the capabilities of retail investors as well as the features of the PRIIPs so as to allow the retail investor to select between different underlying investments or other options provided for by the product, including where this selection can be undertaken at different points in time, or changed in the future.

The ESAs shall submit those draft regulatory technical standards to the Commission by  31 March 2016.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010, of Regulation (EU) No 1094/2010 and of Regulation (EU) No 1095/2010.

Article 9

Marketing communications that contain specific information relating to the PRIIP shall not include any statement that contradicts the information contained in the key information document or diminishes the significance of the key information document. Marketing communications shall indicate that a key information document is available and supply information on how and from where to obtain it, including the PRIIP manufacturer's website.

Article 10

In order to ensure consistent application of this Article, the ESAs shall, through the Joint Committee, develop draft regulatory technical standards specifying:

(a) the conditions for reviewing the information contained in the key information document;

(b) the conditions under which the key information document must be revised;

(c) the specific conditions under which information contained in the key information document must be reviewed or the key information document revised where a PRIIP is made available to retail investors in a non-continuous manner;

(d) the circumstances in which retail investors are to be informed about a revised key information document for a PRIIP purchased by them, as well as the means by which the retail investors are to be informed.

The ESAs shall submit those draft regulatory technical standards to the Commission by 31 December 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010, of Regulation (EU) No 1094/2010 and of Regulation (EU) No 1095/2010.

Article 11

Article 12

Where the key information document concerns an insurance contract, the insurance undertakings' obligations under this Regulation are only towards the policyholder of the insurance contract and not towards the beneficiary of the insurance contract.

SECTION III

Provision of the key information document

Article 13

By way of derogation from paragraph 1 and subject to Article 3(1), point (a) of Article 3(3) and Article 6 of Directive 2002/65/EC, a person selling a PRIIP may provide the retail investor with the key information document after conclusion of the transaction, without undue delay, where all of the following conditions are met:

(a) the retail investor chooses, on his own initiative, to contact the person selling a PRIIP and conclude the transaction using a means of distance communication;

(b) provision of the key information document in accordance with paragraph 1 of this Article is not possible;

(c) the person advising on or selling the PRIIP has informed the retail investor that provision of the key information document is not possible and has clearly stated that the retail investor may delay the transaction in order to receive and read the key information document before concluding the transaction;

(d) the retail investor consents to receiving the key information document without undue delay after conclusion of the transaction, rather than delaying the transaction in order to receive the document in advance.

The ESAs shall submit those draft regulatory technical standards to the Commission by 31 December 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010, of Regulation (EU) No 1094/2010 and of Regulation (EU) No 1095/2010.

Article 14

The person advising on, or selling, a PRIIP shall provide the key information document to the retail investor in one of the following media:

(a) on paper, which should be the default option where the PRIIP is offered on a face-to-face basis, unless the retail investor requests otherwise;

(b) using a durable medium other than paper, where the conditions laid down in paragraph 4 are met; or

(c) by means of a website where the conditions laid down in paragraph 5 are met.

The key information document may be provided using a durable medium other than paper if the following conditions are met:

(a) the use of the durable medium is appropriate in the context of the business conducted between the person advising on, or selling, a PRIIP and the retail investor; and

(b) the retail investor has been given the choice between information on paper and in the durable medium, and has chosen that other medium in a way that can be evidenced.

The key information document may be provided by the means of a website that does not meet the definition of a durable medium if all of the following conditions are met:

(a) the provision of the key information document by means of a website is appropriate in the context of the business conducted between the person advising on, or selling, a PRIIP and the retail investor;

(b) the retail investor has been given the choice between information provided on paper and by means of a website and has chosen the latter in a way that can be evidenced;

(c) the retail investor has been notified electronically, or in written form, of the address of the website, and the place on the website where the key information document can be accessed;

(d) the key information document remains accessible on the website, capable of being downloaded and stored in a durable medium, for such period of time as the retail investor may need to consult it.

Where the key information document has been revised in accordance with Article 10, previous versions shall also be provided on request of the retail investor.

CHAPTER III

MARKET MONITORING AND PRODUCT INTERVENTION POWERS

Article 15

Article 16

In accordance with Article 9(5) of Regulation (EU) No 1094/2010, EIOPA may, where the conditions in paragraphs 2 and 3 of this Article are fulfilled, temporarily prohibit or restrict in the Union:

(a) the marketing, distribution or sale of certain insurance-based investment products or insurance-based investment products with certain specified features; or

(b) a type of financial activity or practice of an insurance or reinsurance undertaking.

A prohibition or restriction may apply in circumstances, or be subject to exceptions, specified by EIOPA.

EIOPA shall take a decision under paragraph 1 only if all of the following conditions are fulfilled:

(a) the proposed action addresses a significant investor protection concern or a threat to the orderly functioning and integrity of financial markets or to the stability of the whole or part of the financial system in the Union;

(b) regulatory requirements under Union law that are applicable to the relevant insurance-based investment product or activity do not address the threat;

(c) a competent authority or competent authorities have not taken action to address the threat or the actions that have been taken do not adequately address the threat.

Where the conditions set out in the first subparagraph are fulfilled, EIOPA may impose the prohibition or restriction referred to in paragraph 1 on a precautionary basis before an insurance-based investment product has been marketed or sold to investors.

When taking action under this Article, EIOPA shall ensure that the action does not:

(a) have a detrimental effect on the efficiency of financial markets or on investors that is disproportionate to the benefits of the action; or

(b) create a risk of regulatory arbitrage.

Where a competent authority or competent authorities have taken a measure under Article 17, EIOPA may take any of the measures referred to in paragraph 1 of this Article without issuing the opinion provided for in Article 18.

Those criteria and factors shall include: