Updated PRIIPs Q&As

Nine new questions are included in the latest version of the PRIIPs Q&As, published on 20 November, including a new section with a couple of questions on Multi-Option Products (MOPs).

While some of the new questions are just clarifications of details, others show that some pretty significant issues are still being raised, this close to the deadline.

In the former category, we have been told that the terms “biometric risk premium” and “insurance premium” are interchangeable.  Also, the different numbers of trading days per year shown in publications over the last couple of years are only indicative, as they can vary from country to country, and therefore the actual number of trading days should be used in the performance calculations.

On the other hand, it has been confirmed that the narrative explanations in the Regulatory Technical Standards (RTS) are generally prescribed and should only be changed “where the verbatim use of the prescribed wording creates a risk that the retail investor will be misinformed about the characteristics of the product”, as may be the case with over-the-counter derivatives.  Even then, the alternative wording has been prescribed.

There is a detailed answer on the calculation of the range of costs shown on a generic MOP KID.  The KID should show the highest and lowest costs for any product/fund combination available, including transaction and insurance costs and the answer to this question reaffirms what you can do about transaction costs on UCITS (and NURS) funds within a MOP, depending on whether the full range of investment options includes only UCITS/NURS or other funds as well.

Fortunately, nothing totally unexpected has come out of the latest Q&As, as it’s way too late in the day for surprises, but one or two areas where there may have been uncertainty have now been cleared up.  This will hopefully be the last set of Q&As before the live date, as there’s no time for any further development or even minor tweaks.

For more information, please contact us.