UK: EU PRIIPs Regulation And Kids: Q&As

The PRIIPs Regulation (EU/2014/1286), together with the regulatory technical standards in Commission Delegated Regulation (EU/2017/653) will apply from 1 January 2018.

Almost 10 years in the making, the PRIIPs Regulation aims to encourage efficient EU markets by helping retail investors to better understand and compare the key features, risks, rewards and costs of different packaged retail investment and insurance based products (PRIIPs) through access to a Key Information Document (KID).

Here, Gowling WLG's regulatory experts give an overview of UK implementation of the regulation, its scope and key provisions, and the potential fines individuals and companies can expect if there is a breach.

UK implementation

The PRIIPs Regulation is an EU Regulation, which means it will apply directly in the UK without the need for any domestic implementing legislation. As a result, the UK has limited policy discretion in how the provisions of the PRIIPs Regulation take effect. However, it will require changes to certain disclosure and information requirements in the Financial Conduct Authority (FCA) Handbook in order for the UK to become compliant with the provisions in the PRIIPs Regulation.

The FCA consulted on its approach to the PRIIPs Regulation in 2016 (CP16/18) and issued its policy statement (with its final rules and guidance) in May 2017 (PS17/6).

The FCA acknowledges there is limited guidance at EU level on the PRIIPs Regulation and that this may lead to practical difficulties with implementation and uncertainty. To date, the European Supervisory Authorities have issued Q&As on the PRIIPs KID. The Association of Investment Companies (AIC) also issued guidance in September 2017 for investment companies (available to subscribers).


The scope of the PRIIPs Regulation is wide. It applies to anyone that:

  • manufactures (or changes an existing PRIIP, including altering its risk and reward profile or the costs associated with an investment in a PRIIP);
  • advises on; or
  • sells,

PRIIPs to retail investors in the EU/EEA. This captures fund managers, stockbrokers, financial advisers and intermediaries, insurance companies, investment firms, credit institutions and retail investment product providers.

What are PRIIPs?

The definition is wide and covers a broad range of products and structures.

PRIIPs are investment products, where the amount repayable to the retail investor is subject to: (i) fluctuation because of exposure to reference values; or (ii) the performance of one or more assets that are not directly purchased by the retail investor.

Examples of PRIIPs include:

  • regulated collective investment schemes, including non-UCITS retail schemes, qualified investor schemes and individually recognised overseas schemes. UCITS schemes are PRIIPs, however they must comply with the PRIIPs Regulation with effect from 31 December 2019 (rather than 1 January 2018);
  • unregulated collective investment schemes (which may also be alternative investment funds) including some unauthorised unit trust schemes, venture capital trusts and private equity funds;
  • other alternative investment funds which are not collective investment schemes, such as investment trusts and other listed onshore and offshore investment companies (including REITs structured as alternative investment funds);
  • structured investment products, including debt securities where the amount repayable is subject to fluctuations; and
  • securities issued by certain SPVs with variable returns.

This list is intended to be indicative only and is not exhaustive.

What products are not PRIIPs?

Examples include:

  • investment funds dedicated to institutional investors only (since they are not for sale to retail investors);
  • assets (such as corporate shares or bonds) held directly by the retail investor; and
  • products where the rate of return is fixed in advance for the entire life of the product.

What are the obligations on PRIIPs manufacturers?

A PRIIP manufacturer (or any other person who changes an existing PRIIP, including altering its risk and reward profile or the costs associated with an investment in a PRIIP) must:

  • prepare, and keep updated, a KID for each PRIIP that they produce; and
  • publish each KID on their website.

The KID should be reviewed every time there is a change that significantly affects (or is likely to significantly affect) the information in the KID. This could include a change of investment manager, a change to the investment policy, a change to the investment management charges or performance fee, the withdrawal of any buy-back facility provided by an investment company, or the failure to pass a continuation vote.

When must a KID be provided to a retail investor?

Anyone who makes available a PRIIP to a retail investor must provide the retail investor with a KID in good time before any transaction is concluded.

Where the retail investor initiates the transaction by means of distance communications, the KID may be provided after the conclusion of the transaction, subject to certain conditions.

What is a retail investor?

A retail investor is any investor who is not a professional investor - e.g. is not any of the following:

  • an entity that is authorised or regulated to operate in financial markets (banks, insurers, investment firms, funds, institutional investors, etc.);
  • a large undertaking that meets specified quantitative tests relating to balance sheet, turnover and own funds/employee numbers; or
  • an elective professional client that meets specified quantitative and qualitative tests.

This list is intended to be indicative only and is not exhaustive.

Implications for investment companies

Shares issued by investment companies are likely to be PRIIPs. Investment companies therefore need to identify which entity is the 'PRIIP manufacturer' and therefore must assume responsibility for preparing, providing and publishing the KID for retail clients.

Both the FCA and the AIC consider that the alternative investment fund manager (AIFM) of the investment company would be able to prepare the KID for an investment company. Indeed an AIFM will often be considered the 'PRIIP manufacturer' and the entity that makes available the PRIIP to retail clients.

However, it is possible for the investment company itself to be the 'PRIIP manufacturer' (even when it has appointed an external AIFM), where the investment company remains responsible for its own marketing and has suitable governance arrangements in place independent of the AIFM (such as a board of directors). In such cases, the investment company would be responsible for preparing, providing and publishing the KID for retail clients.

The AIC considers that any investment company security that is available on a secondary market is 'made available' to retail investors and will require a KID. This means that the PRIIP manufacturer (i.e. the AIFM or the investment company) must prepare, provide and publish the KID on its website. It will also need to review, and update, the KID every time there is a significant change relating to the PRIIP.

The KID must be prepared for each class of share issued by an investment company which is traded on a public stock market. It is unlikely that a KID is required for a dividend re-investment plan.

Key provisions on KIDs

A KID is a stand-alone document (no more than 3 sides of A4) that provides retail investors with simple and comparable information on the nature, risks, costs and potential gains and losses of a PRIIP. The KID must be fair, clear and not misleading. It must be written in a concise manner and in language that is clear and succinct.

Format and contents required

The PRIIPs Regulation is prescriptive on format and content. The KID must contain the following information in the following order using the template set out in Annex I of Commission Delegated Regulation (EU/2017/653):

  • General information. Description of the PRIIP, including the identity of the PRIIP manufacturer and its regulator.
  • What is this product? Description of the main features and nature of the PRIIP, including its name, its objectives and how these are to be achieved, its target investor and its term.
  • What are the risks and what could I get in return? Description of the risk and reward profile of the PRIIP by using a summary risk indicator - the rules provide for seven classes of market risk and stipulate the methodology for assigning each PRIIP to one of those classes. Indication of the possible maximum loss and four appropriate performance scenarios, representing:
    1. a stress scenario;
    2. an unfavourable scenario;
    3. a moderate scenario; and
    4. a favourable scenario.
  • What happens if [name of the PRIIP manufacturer] is unable to pay out? Indication of whether the retail investor may face a financial loss due the default of the PRIIP manufacturer (or another entity) and whether the loss is covered by an investor compensation or guarantee scheme (and any limitations of conditions to that cover).
  • What are the costs? Description of the costs associated with an investment in the PRIIP using a summary cost indicator. The rules set out the methodology for calculating the costs - one-off, recurring and incidental. Costs must be expressed in both percentage and monetary terms.
  • How long should I hold it and can I take money out early? Description of the recommended and, where applicable, required minimum holding period, any cooling off or cancellation period and all applicable fees and penalties and consequences of cashing in before the end of the term or recommended holding period.
  • How can I complain? Information about how, and to whom, a retail investor can make a complaint about the PRIIP or the PRIIP manufacturer, adviser or distributor.
  • Other relevant information. Indication of any additional information documents to be provided to the retail investor at the pre-contractual and/or the post-contractual stage (excluding any marketing material).

Comprehension alerts

For complex PRIIPs, a "comprehension alert" must be included in the KID stating: "You are about to purchase a product that is not simple and may be difficult to understand".

A product is regarded as not being simple and as being difficult to understand if:

  • it invests in underlying assets in which retail investors do not commonly invest;
  • it uses a number of different mechanisms to calculate the final return of the investment, creating a greater risk of misunderstanding on the part of the retail investor; or
  • the investment's pay-off takes advantage of retail investor's behavioural biases, such as a teaser rate followed by a much higher floating conditional rate, or an iterative formula.

Responsibility for accuracy of KIDs

The PRIIP manufacturer is responsible for ensuring the accuracy of the KID. A retail investor may be able to hold the PRIIP manufacturer liable for an infringement of the PRIIPs Regulation where he or she suffers damage as a result of reliance on a KID:

  • that is inconsistent with pre-contractual or contractual documents under the PRIIP manufacturer's control;
  • that is misleading or inaccurate; or
  • where the KID does not comply with prescribed format and content requirements.

Sanctions for breach of the PRIIPs regulation

The FCA will be responsible for supervising compliance with the PRIIPs Regulation in the UK.

Administrative Sanctions

The FCA may issue a PRIIP manufacturer, adviser or distributor with an order:

  • prohibiting the marketing of the PRIIP;
  • suspending the marketing of the PRIIP;
  • prohibiting it from providing a KID that does not comply with the PRIIPs Regulation; or
  • requiring it to publish a new version of a KID.

Individuals are liable to fines of up to:

EUR 700,000 (or equivalent amount) or twice the amount of profits gained, or losses avoided, because of the breach.

Companies are liable to fines of up to:

EUR 5 million (or equivalent amount) or up to 3% of its total annual turnover or twice the amount of profits gained, or losses avoided, because of the breach.

Next steps

PRIIP manufacturers, distributors and advisers should now be putting into place the measures necessary to comply with the requirements of the PRIIPs Regulation. The new rules take effect on 1 January 2018.

Key areas of focus

  • Scoping - identifying whether a product is a PRIIP within the scope of the PRIIPs Regulation and identifying the PRIIP manufacturer;
  • Collating data - understanding the data requirements for the KID and the complex methodology that must be applied when calculating risks and returns and costs;
  • Preparing the KID - producing a KID for each PRIIP and ensuring it fully complies with the PRIIPs Regulation;
  • Website - setting up a webpage on the PRIIP manufacturers' website that is dedicated to KID publications and kept up-to-date;
  • Monitoring and updating - establishing processes to ensure the KID is reviewed on both a regular and ad-hoc basis and kept up-to-date;
  • Distribution - reviewing and updating agreements with distributors, advisers and intermediaries vis-ŕ-vis their obligations and liabilities under the PRIIPs Regulation; and
  • Complaints handling - establishing an effective complaints procedure.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
31 Oct 2017, Seminar, Toronto, Canada

Gowling WLG and ACA Aponix have joined forces to provide a practical session for regulated financial services businesses, putting the legal requirements into context and giving you concrete actions.

1 Nov 2017, Seminar, London, UK

Our next ThinkHouse Foundations session has again taken on board your feedback from the last session which means we are turning our attention to employment, cloud and warranties and liabilities.

2 Nov 2017, Seminar, Toronto, Canada

Our next ThinkHouse Foundations session has again taken on board your feedback from the last session which means we are turning our attention to employment, cloud and warranties and liabilities.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.