Where do we stand now?
On Tuesday 21st July 2020, the ESAs announced their letter to the European Commission, regretfully notifying them they could not deliver a finalised RTS. The securities market regulator and banking regulator supported the proposals, but there were insufficient board members from the European Insurance and Occupational Pensions Authority (EIOPA) able to approve their latest collective efforts.
Some board members had argued that a partial revision of the PRIIPs Delegated Regulation was inappropriate ahead of a comprehensive review of the entire [level 1] regime (i.e. as stipulated in the original 2014 PRIIPs Regulation). Others indicated their preference for the past performance graph from UCITS (Undertakings for the Collective Investment in Transferable Securities) KID to be included in the PRIIPs KID for investment funds, which was also shared by the three ESA co-signatories.
As a result, this unprecedented state of affairs can only be resolved by the European Commission. The EC was also recently recommended by the expert CMU High-level forum to undertake a review of the Level 1 PRIIPS regulation “as soon as possible”.
Moreover, even if the European Commission stands ready to act decisively, there are additional challenges ahead in the shape of European Parliamentarians, who are reportedly citing the continuing pandemic as a key reason to obstruct any legislative changes to current PRIIPS performance rules.
The fate of the current PRIIPS KID remains uncertain, including links to UCITS funds (marketed to retail and professional investors) exempt until 31 Dec 2021 and the separate KID.
As the debate rages on, the main impact is on asset managers who will be left wondering how to ensure they stay compliant with regulations when the regulatory sands are constantly shifting. With the support of regtech solutions, asset managers can be sure they are meeting their respective PRIIPS and MiFID II cost and charge disclosure obligations, however the situation develops.