PRIIPS

Packaged retail investment and insurance products (PRIIPs) is European Union regulatory term to encompass a range of investment products that banks or other financial institutions offer to consumers. It was first used in regulation (EU) No 1286/2014, known as the PRIIPs regulation, the aim of which was to improve the transparency and comparability of investment products across the EU through mandating key information documents.

PRIIPs is used in the European Union as an alternative to savings accounts.^[1] In particular, PRIIPs include non-equity financial products such as bonds, insurance policies, mutual funds and structured funds, structured deposits, and structured products. As of 2018^[update], these investment products make up a market in Europe worth up to €10 trillion.

History

The EU regulatory project started in 2014 on the basis that retail investors across the EU often made investments without understanding the associated risks and costs, some of which led investors to suffer unforeseen losses.^[2]

The regulation was introduced in 2018 with aims to protect retail investors by adopting some key-principles: - comparability: the investment prospectus has to allow direct comparison between different products that meet a retail investor’s stated aims; - synthesis: the key-information has to be contained in a prospectus of maximum three pages; - know your products: regulations has to set out new calculation methodologies in order to ensure risk-return transparency of the investment products; - standardization: the key-information document has to be valid across the EU and report homogeneous statements.^[3]^[4]

The regulation was made as a result of surveys and consultations conducted by the European Commission. These activities were to test the effectiveness of presented information to retail investors within the PRIIPs framework^[5] The information presented during the test recalled the need of reporting performance scenarios about the investment ^[6]

This probabilistic scenarios approach was originally developed by Marcello Minenna within “a quantitative framework to assess the risk-return of non-equity products” ^[7]^[8]

Contributions in support of the probabilistic approach arrived from the Movement for risk transparency (i.e.: a group of academics, consumers associations, unions and other representatives of investors’ interests)^[9]

The new regulations were issued in 2018 and provided the obligation for the product manufacturers to elaborate for each investment product a Key-Information-Document of no more than 3 pages that would include a general description of the provider, an explanation of the main factors that the investment's return depends upon, the level of risk associated with the product (classed from 1 to 7), an indication of the possible maximum loss (including four performance scenarios), and a table explaining the costs of one's investment over time.^[10]

References

^ "Packaged Retail and Insurance-Based Investment Products (PRIIPs)". European Commission.
^ "Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs)". European Commission.
^ "Packaged Retail and Insurance-Based Investment Products (PRIIPs)". EIOPA.
^ "PRIIPs - Overview and FAQs". HSBC.
^ "ESAs invite stakeholders' input on PRIIPs review". European Supervisory Authorities.
^ "Joint Consultation Paper concerning - amendments to the PRIIPs KID" (PDF). European Supervisory Authorities.
^ "A Quantitative Framework to Assess the Risk-Reward Profile of Non-Equity Products". RiskBooks.
^ "A Quantitative risk-based approach to the transparency on Non-Equity Products". Consob - The Italian Securities and Exchange Commission.
^ "Risk Transparency via performance scenario". Movement4RiskTransparency.
^ "Call for Input: PRIIPs Regulation – initial experiences with the new requirements" (PDF). Financial Conduct Authority.

[1] "Packaged Retail and Insurance-Based Investment Products (PRIIPs)". European Commission.

[2] "Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs)". European Commission.

[3] "Packaged Retail and Insurance-Based Investment Products (PRIIPs)". EIOPA.

[4] "PRIIPs - Overview and FAQs". HSBC.

[5] "ESAs invite stakeholders' input on PRIIPs review". European Supervisory Authorities.

[6] "Joint Consultation Paper concerning - amendments to the PRIIPs KID" (PDF). European Supervisory Authorities.

[7] "A Quantitative Framework to Assess the Risk-Reward Profile of Non-Equity Products". RiskBooks.

[8] "A Quantitative risk-based approach to the transparency on Non-Equity Products". Consob - The Italian Securities and Exchange Commission.

[9] "Risk Transparency via performance scenario". Movement4RiskTransparency.

[10] "Call for Input: PRIIPs Regulation – initial experiences with the new requirements" (PDF). Financial Conduct Authority.

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Cases	ECJ Rulings ( Caselex): Allonby v Accrington and Rossendale College Apostolides v Orams Bosman Cassis de Dijon Chacón Navas v Eurest Colectividades SA Chen Ciarán Tobin Coleman v Attridge Law Costa v ENEL Factortame Francovich Kamer van Koophandel en Fabrieken voor Amsterdam v Inspire Art Ltd Kolpak Microsoft Corp. v. Commission Marleasing SA v La Comercial Internacional de Alimentacion SA Metock Nordsee Palacios de la Villa v Cortefiel Servicios SA Peter Paul and Others v Bundesrepublik Deutschland Procureur du Roi v Dassonville Ralf Sieckmann v Deutsches Patent und Markenamt Tanja Kreil Van Duyn v Home Office Van Gend en Loos
Fraud	Court of Auditors European Anti-Fraud Office Accountability in the European Union
European Union portal Law portal

v t e Judiciary and law of the European Union
Judiciary	Court of Justice of the European Union European Court of Justice members Advocates General General Court Civil Service Tribunal European lawyer Relationship with ECHR Public Prosecutor European civil code
Treaties	Rome Treaty Merger Treaty Single European Act Maastricht Treaty Amsterdam Treaty Nice Treaty Lisbon Treaty Charter of Fundamental Rights Opt-outs
Acts	Acquis: Regulation Directive Framework Directive Decision Recommendation Digital Services Act
Procedures	Ordinary legislative procedure Consultation procedure Consent procedure Commission and Council acting alone Commission acting alone
Principles and terms	Acquis communautaire EUR-Lex Direct applicability Direct effect European labour law European Enforcement Order Gold-plating Four freedoms Home state regulation Indirect effect Incidental effect Minimum harmonisation Maximum harmonisation Preliminary ruling Precautionary principle Principle of legal certainty Recasting Principle of conferral Proportionality Staatenverbund State liability Subsidiarity Supremacy
Regulations	Council Regulation (EC) No. 1206/2001 Council Regulation (EC) No. 1348/2000 Customs Regulation 1383/2003 Regulation (EC) No 261/2004 EU-Eco-regulation Commission Regulation (EC) No. 2257/94 Commission Regulation (EU) No. 1170/2011 Customs Regulation 3295/94 Regulation on roaming charges Brussels Regime CLP Regulation Regulation on Community designs Societas Europaea European Union System for the Evaluation of Substances Commission Regulation (EC) No 474/2006 REACH Rome II Regulation Rule of Law Conditionality Regulation
Directives	Good Clinical Practice Directive Data Protection Directive ATEX directive Battery Directive Best available technology Biocidal Products Directive Birds Directive Capital Requirements Directives Clinical Trials Directive Computer Programs Directive Conditional Access Directive Copyright Duration Directive (93/98/EEC) Copyright Term Directive (2006/116/EC) Cosmetics Directive Dangerous Substances Directive (67/548/EEC) Dangerous Preparations Directive Data Retention Directive Database Directive Database right Directive 2000/43/EC on Anti-discrimination Directive establishing a general framework for equal treatment in employment and occupation Information Society Directive (first Copyright directive) Directive on Privacy and Electronic Communications Directive on the Promotion of the use of biofuels and other renewable fuels for transport Directive on the re-use of public sector information Directive on Electricity Production from Renewable Energy Sources End of Life Vehicles Directive CHP Directive Directive on the energy performance of buildings Directive on the enforcement of intellectual property rights Directive 2004/38/EC on the right to move and reside freely Environmental liability directive European SEA Directive 2001/42/EC European units of measurement directives Habitats Directive Integrated Pollution Prevention and Control Internal Market in Electricity Directive Landfill Directive Directive on the legal protection of biotechnological inventions Directive on the legal protection of designs Markets in Financial Instruments Directive Measuring Instruments Directive Medical Devices Directive Posted Workers Directive Pressure Equipment Directive Rental Directive Resale Rights Directive Restriction of Hazardous Substances Directive Satellite and Cable Directive Directive on services in the internal market Temporary and Agency Work Directive Trade Marks Directive European Directive on Traditional Herbal Medicinal Products Unfair Commercial Practices Directive Universal Service Directive Urban Waste Water Treatment Directive Waste Electrical and Electronic Equipment Directive Waste Incineration Directive Waste framework directive Water Framework Directive Working Time Directive
Cases	ECJ Rulings ( Caselex): Allonby v Accrington and Rossendale College Apostolides v Orams Bosman Cassis de Dijon Chacón Navas v Eurest Colectividades SA Chen Ciarán Tobin Coleman v Attridge Law Costa v ENEL Factortame Francovich Kamer van Koophandel en Fabrieken voor Amsterdam v Inspire Art Ltd Kolpak Microsoft Corp. v. Commission Marleasing SA v La Comercial Internacional de Alimentacion SA Metock Nordsee Palacios de la Villa v Cortefiel Servicios SA Peter Paul and Others v Bundesrepublik Deutschland Procureur du Roi v Dassonville Ralf Sieckmann v Deutsches Patent und Markenamt Tanja Kreil Van Duyn v Home Office Van Gend en Loos
Fraud	Court of Auditors European Anti-Fraud Office Accountability in the European Union
European Union portal Law portal

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