EIOPA agreement unlikely to spell the end for PRIIPs Regulation controversy

The European Insurance and Occupational Pensions Authority (EIOPA) has finally agreed to the Regulatory Technical Standards (RTS) they rejected last year, meaning one of the final barriers to implementing the changes to the PRIIPs Regulation has been removed.

In a vote yesterday EIOPA agreed to the RTS on the basis of a promised review of the Level 1 regs, which “will take place as soon as possible, taking into account the results from the cross-sectoral study on Disclosure, Inducements and Suitability Rules for Retail Investors launched in September 2020 and due by end 2021”.

Mikkel Bates, Regulations Manager at FE fundinfo said:

“EIOPA’s agreement brings to an end months of uncertainty among the ESAs about the adoption of the RTS. But it is unlikely to be welcomed by many fund groups who are likely to struggle to meet the 31 December end date for the exemption to UCITS KIIDs.

“EIOPA’s agreement will not spell the end for the controversy surrounding PRIIPs KIDs. While we expect the Commission will almost certainly look to stick to the end date of the UCITS KIID exemption, the outstanding issues surrounding the inclusion of past performance and the continued use of future performance scenarios have not gone away. With less than 11 months until the exemption deadline, there remains a deep scepticism about the efficacy of PRIIPs KIDs.

“Lobby groups, including EFAMA and Better Finance, who have criticised the implementation plan in the past, are likely to push for a further extension, but such calls may not gain much support from the ESAs following the vote. What is clear however is that the ‘fight’ isn’t over; the draft RTS are now subject to adoption by the Commission. When/if they are adopted, they would then be subject to non-objection by the European Parliament and the Council, which would normally be a formality, but it should be remembered that they rejected the earliest version of the RTS in 2016. Further uncertainty cannot be ruled out.”