2023/0166/COD: Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) No 1286/2014 as regards the modernisation of the key information document

A new proposed regulation as regards modifications to the Packaged Retail and Insurance-based Investment Products Regulation (PRIIPs Regulation) to modernize the key information document (KID) was published in the Official Journal (OJ) of the EU. The key objective of the proposed new regulation is to introduce targeted amendments to make the KID more reader-friendly through simplification and removal of unnecessary information, enable the comparison of various investment products, facilitate the digital issue and presentation of the KID, and include new requirements pertaining to the disclosure of the sustainability of a product. Some of the key proposed changes to the current PRIIPs Regulation are outlined below; for more detailed, comprehensive information, please consult the enclosed document.
#### Key proposed changes to the PRIIPs Regulation
1. Exclusion of immediate annuities: Retail products providing immediate annuities without a redemption phase will be excluded from the scope of the PRIIPs Regulation.
2. Exemption for corporate bonds with make-whole clauses: Corporate bonds with make-whole clauses will be exempt from the PRIIPs Regulation, unless price fluctuations can be attributed to the make-whole clause (price fluctuation is one of the key requirements of products to come under the remit of the PRIIPs Regulation).
3. Generic descriptions for investment alternatives: Manufacturers of PRIIPS products with various investment alternatives where not all details of each alternative can be disclosed in the KID will now have to provide a generic description of each alternative in the KID only provided that they meet certain requirements (e.g. the manufacturer offers research tools to facilitate the comparison of the alternatives or the pre-contractual documents of the alternatives are easily accessible).
4. New Product at a glance“ section in the KID: There will be a new section in the KID entitled „Product at a glance“. This section will require a brief disclosure of key information on a product including the product type, its total costs, the recommended holding period, its level of risk (summary risk indicator), and an indication whether the product offers insurance benefits.
5. Removal of comprehension alert: The comprehension alert, which warns investors about the purchase of a product, will be removed from the KID.
6. New „How environmentally sustainable is this product?“ section: There will be a new section in the KID entitled „How environmentally sustainable is this product?“ to provide key information on the sustainability profile of an investment. The disclosures will build upon existing product disclosures in Regulation (EU) 2019/2088, the Sustainable Finance Disclosure Regulation (SFDR), and Regulation (EU) 2020/852, the Taxonomy Regulation (TR) so as to reduce reporting burdens on firms and to standardize the information provided in this section.
7. Electronic distribution of KID: The standard distribution method for the KID will be changed to electronic means. However, clients can still request a paper form of the PRIIPs KID, which must be provided free of charge.
8. Interactive personalized key information tool: Distributors of PRIIPs will be allowed to offer clients an interactive tool that generates personalized key information based on the information in the KID or its underlying information. Specific conditions must be met for the use of this tool.
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To provide PRIIPs manufacturers sufficient time to prepare for the changes, the proposed regulation would apply 18 months following its effective date.