4 February 2021


Last night the ESA confirmed qualified majority approval of their draft RTS, thereby backing new standards for packaged retail and insurance-based investment products that (could, some day) lead to the removal of the UCITS KIID.

European Supervisory Authorities “dump UCITS KIID” according to various media outlets on Thursday morning. This follows the letter sent to the European Commission last night from the European Supervisory Authorities (ESAs) confirming qualified majority approval of their draft RTS.  The ESA approval is given on the understanding there will be a wider examination of cited areas of concern (in the EC’s forthcoming level 1 review of the entire regime).

Latest press speculation seems to be based on referral to a key quotation in the previous document supplied last June:

“The recommendation of the ESAs is to avoid the coexistence of the PRIIPs KID and the UCITS KIID. This is expected to mean that that the UCITS Directive would need to be amended so that UCITS managers no longer have to provide a UCITS KIID to retail investors. At this stage, the ESAs have not provided a recommendation on which document, if any, should be provided to professional investors, instead of the UCITS KIID. This is because the ESAs are of the view that more time is needed to reflect on this issue.”

As always with these matters, it is for the EU Commission to decide the outcome.

A removal of the current obligation to supply a UCITS KIID to retail investors, or an outright abolition of the KIID, would probably require a level 1 amendment to the UCITS IV Directive (published in 2009). This would take a significant amount of time to implement (and until now, is a course of action the EC has avoided). The ESAs themselves reflect that their recommendation “implies” an amendment to UCITS (level 1).

Meantime, a PRIIPS level 1 remains overdue (and needs to be scheduled), also.

Expect an EC statement of their final decision (including the confirmed legal application timelines) within a matter of days.

More to follow.

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