The Austrian Financial Market Authority (FMA) today published a circular on the new key information documents (KIDs) for packaged retail and insurance-based investment products. These Key Information Documents (KIDs) pursuant to the PRIIP Regulation[1], are not allowed to be longer than three A4 pages and are required to contain all material prescribed information about such a product in a standardised format and in a comparable form. The circular clarifies the legal requirements as well as resolving open questions.
“As the range of products for investors on the financial market are becoming increasingly broad and the products offered ever more complex, the European legislator has created a standardised, comparable information that is also comprehensible for inexperienced investors in the form of the key information documents that are required to be produced,” remarked the FMA’s Executive Directors, Helmut Ettl and Klaus Kumpfmüller: “KIDs increase product transparency, improve comparability, also across sectoral and product boundaries, and form a basis for appropriate investment decisions.”
The key information documents are required to contain the following information in standardised format:
- The name of the PRIIP, the identity and contact details of the PRIIP manufacturer, information about the competent authority as the data of the information document.
- The type of and more important features of the PRIIP including its investment aims and the means used to achieve them; the description of the type of retail investor to whom the PRIIP is marketed; (where known) the term of the PRIIP.
- Recommended and where applicable the prescribed minimum holding period as well as a statement about the possibilities for the early surrendering of the investment, including the conditions for doing so.
- Information about how and to whom the retail investor may submit a compliant about the product or about the conduct of the PRIIP manufacturer or a person who advises or sells the product.
- A brief, standardised description of the risk/yield profile.
- Disclosure of all costs associated with an investment in this PRIIP.
In order to be able to compare the potential earnings performance of an investment with other products, the key information document must also show four scenarios (stress scenario, pessimistic, balanced and optimistic scenario) and in the case of insurance-based investment products must also contain a scenario for the insured event (death scenario). Significant information for the clients, such as the risks or costs of a product must also be supplied in the form of aggregated indicators. The total risk indicator, which takes the form of a scale from one to seven (with 1 being the lowest risk and 7 the highest) provides information about the risks into which the customer enters. Both the total costs as well as their effect on returns (Reduction in Yield – RIY) are required to be stated in the section “Cost over time”. The breakdown of costs is to be disclosed in a standardised table in the KID.
The key information documents (KIDs) must be published on the website of the product manufacturer, must be updated regularly, and must be made available to the customer by the advisor or broker in a timely manner.
The FMA has made clarifications with regard to the scope of application for insurance-based investment products, the consistent use of the prescribed terms (such as, e.g., “investment” or “insurance premium”) and the design of the key information document, in the FMA circular on key information documents for packaged retail and insurance-based products, to ensure the consistent application of the PRIIP Regulation, and to thereby ensure the comparability of the key information documents for investors.
Journalists may address further enquiries to:
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0)1/24959-6006
+43/(0)676/882 49 516
[1] PRIIP Regulation: Regulation (EU) No 1286/2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs)