• Product description including determination of the target investor and the intended purpose of the investment;
• A summary risk indicator which depicts the market and credit risk in quantitative terms and which must be supplemented to include qualitative statements on liquidity;
• Three performance scenarios and a stress scenario on the term or recommend holding period of the Priip;
• A summary cost indicator and a breakdown of the costs, including for interim periods;
• Information on the consequences of an early exit from the Priip;
• For the investor: possible complaint procedures.
8. What is different now with respect to the first draft?
First, the three performance scenarios have been complemented by a so-called stress scenario. The consumer needs to understand what might happen in a worst-case scenario with the investment.
Secondly, if a Priip consists of Ucits funds as their target investment, Priip manufacturers may use a different calculation method for the information contained in a Priip without having to point this out to the investor (only possible until the end of 2019).
Thirdly, a sentence has to be added for all documents for Priips which are considered as being complex under the criteria of Mifid II and the Insurance Directive and are therefore not sold on an execution-only basis: “You are about to purchase a product that is not simple and may be difficult to understand.”
9. What has to be considered by providing a Priip?
Any investor who is interested in purchasing a Priip, irrespective of the information channel and whether the investor decides in the end to invest in such a Priip or not, has to receive a KID with regard to the respective Priip.
Generally, the seller and the manufacturer of the Priip are both liable with regard to the investment advice process respective the content of the Kid.
10. Complaints and redress
The seller and the manufacturer must have in place appropriate complaint and redress procedures for the retail investors that invest in a PRIIP.
Oliver Dreher is a partner at law firm CMS, and Tanja Kordys is a senior associate for CMS.