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FMA using AI to review thousands of key information documents issued by Austrian credit institutions and retail funds

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As part of its conduct supervision, the Austrian Financial Market Authority (FMA) reviews key information documents introduced by the European Union for investment products that target retail investors. By using AI methods such as text mining and natural language processing, it is possible to focus when checking many thousands of pages. “The FMA uses modern technological aids, to allow both the supervisor and supervised entities to deploy resources efficiently and in a risk-oriented manner”, remarked the FMA’s Executive Directors Helmut Ettl and Eduard Müller. “Naturally it is always the human in the loop that assesses the facts and reaches supervisory decisions. This may however occur in a more targeted and efficient manner with the help of the latest intelligent methods, as for example the screening of key information documents demonstrates.”

In the analysis of key information documents by Austrian providers, published by the FMA for the first time, the majority have proven themselves to be high quality and unproblematic. Anomalies identified in the analysis are addressed on a continuing basis in supervision work. No severe regulatory breaches (against the PRIIP Regulation (PRIIP-R) and the PRIIP Delegated Regulation(PRIIP-DR)) were found.

PRIIPs-KIDs

Since the start of 2023 retail funds have also been obliged to prepare these standardised, simple to understand and brief information documents prescribed by the European Union. Credit institution have already been required to produce key information documents for several years. The industry calls these documents PRIIPs-KIDs – an acronym that stands for Packaged Retail and Insurance-based Investment Products-Key Information Documents. The most important information that are required to be stated relate to the cost of the product, its risk as well as details about its expected financial performance. The key information documents are an essential document for retail investors, as they preview a clear, comprehensible and comparable overview of the features of a product, and make an investment decision easier. Further information about PRIIPs-KIDs for consumers can be found in the latest edition of the FMA’s series “Let’s talk about money” on “Comparing investment funds – how a key information document can help you”.

Automated analysis

Due to the large number and standardised format, key information documents lend themselves well to using computer-assisted analysis methods. The FMA’s screening used text mining and natural language processing. The analysis focussed on compliance with formal rules and their availability. In substantive terms, plausibility checks were conducted for the values stated for fees, risk and performance. The FMA analysed 10,549 key information documents prepared by 34 Austrian credit institutions that already have been required to prepare them for a while. This year, the 1,876 analysed key information documents of 995 Austrian retail funds, for which a transitional rule had hitherto applied, were analysed in this way for the first time.

Download link: Marktanalyse PRIIPs-KID 2024 (Format: pdf, Size: 336,7 KB, Language: German)

Journalists may address further enquiries to:

Boris Gröndahl (FMA Media Spokesperson)

Telephone: +43 (1) 249 59-6010

Mobile: +43 676 8824 9995

E-Mail: [email protected]

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