The European Commission's work on packaged retail investment products or "PRIPs" started a long time ago but now, at last, in April 2014 we have the provisional version of the adopted text post approval of the proposals by Parliament on 15 April. The question is now whether the settled initiatives will go far enough in order to level the playing field between comparable products – it mainly addresses selling practices which can result in only a partial levelling of the playing field.
There has been longstanding commentary on the need where economic characteristics of a product are similar for there to be rules governing their sale to be substantially similar, whether they are sold in the banking, insurance or securities sector. In the absence of EU‐wide regulation on this wide range of PRIPs products, individual countries had inevitably started to take their own initiatives for their own domesc markets and this EU Commission PRIPs initiative is an attempt to standardise the approach across the EU.
Whilst it may be the case that really only UCITS are currently sold on a major basis cross‐border with the UCITS passport, there is a prospect of alternative investment funds now being sold pursuant to the AIFMD marketing passport, and this PRIPs initiative is designed to establish a commonality of regulatory approach across a much wider range of products. The main content of the Regulation regarding key information documents for retail investment products is derived from the UCITS key information document template.
A working document of Commission Services (DG internal market) was issued in November 2010 which was a consultation by Commission Services on legislative steps for the packaged retail investment products initiative. That consultation represented the views of Commission Services and did not represent or prejudge the contents of further work of the Commission. It flagged up two key market failings to be addressed for the European retail investment markets concerned:
- the information provided to investors by those producing and selling investments to them; and
- conflicts of interest of those producing and selling investments and the interests of their client.
The July 2012 Commission proposed Regulation focused on the first of these failings ‐ the provision of information pre‐sale. It is this proposal which has now developed into a new Regulation.