In today’s complex financial landscape, the need for robust regulatory frameworks has never been more critical. With global markets evolving and financial products becoming increasingly intricate, investors require clear, standardized information to make informed decisions. Regulatory frameworks, such as the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation, serve as essential tools for maintaining transparency and ensuring that all stakeholders operate with clarity and fairness.
The regulatory landscape ensures that retail investors can access essential product details in a format that allows for straightforward comparison, risk assessment, and performance expectations. By enforcing clear guidelines on how information should be presented, these frameworks prevent misinformation or the omission of critical details that could mislead consumers.
For financial service providers, adhering to regulatory frameworks like PRIIPs is not just about compliance—it's about building trust with consumers. In an environment where financial scandals and mismanagement have eroded confidence, adhering to transparent regulations helps to reassure clients and maintain the integrity of financial markets.
With this blog post, Evdokia Pitsillidou, an instructor at the institute, provides learners with in-depth education on the regulatory framework of PRIIPs. She also expands on the requirements of a Key Information Document (KID) and provides practical examples on how to prepare a KID. Further, a comprehensive online course is offered through the IforPE platform, titled Learn the PRIIPs Regulation & Key Information Document (KID) in 2024.
Towards the end of this blog post, you will find detailed information about the valuable skills and competencies acquired upon course completion and how they contribute to ensuring the complete understanding of the PRIIPs regulation.
The PRIIPs Regulation Framework and Compliance Essentials
The PRIIPs Regulation, introduced as EU Regulation No. 1286/2014, aims to standardize the presentation of essential information for retail investment products, ensuring transparency and comparability for investors. This regulation mandates the creation of a Key Information Document (KID) for each product, providing a summary of key features, risks, and costs to help consumers make informed choices. This course covers the latest updates and best practices, offering valuable insights into the requirements for compliant KID preparation.
A central component of the course is understanding the EU’s structured approach to financial regulation through the Lamfalussy Process. This multi-tiered legislative framework, comprising Levels 1 through 4, outlines how EU financial regulations like PRIIPs are developed, implemented, and supervised. In this course, participants will learn how the framework influences KID requirements and how the European Securities and Markets Authority (ESMA) and local regulators enforce consistent application across member states.
Key Information Documents (KID)
The Key Information Document (KID) is a central element of the PRIIPs Regulation, designed to enhance transparency for retail investors. Its primary purpose is to provide potential investors with a clear summary of an investment product’s features, risks, costs, and potential performance. By standardizing the format and ensuring easy-to-understand language, the KID allows investors to make informed decisions, even for complex financial products. Firms offering PRIIPs are required to deliver the KID before any transaction, ensuring that investors have the information they need well in advance.
Creating a compliant KID involves a multi-step process, beginning with a thorough assessment of the target market and product suitability. Firms must then incorporate critical information, including performance scenarios, cost breakdowns, and potential risks. Each KID should also outline options for investor protection, such as compensation funds, and provide clear guidance on how to file complaints if necessary. By addressing these requirements, the KID not only meets regulatory standards but also fosters trust and clarity between financial service providers and retail investors.
What is the “Learn the PRIIPs Regulation & Key Information Document (KID) in 2024” course and what does it include?
The
Learn the PRIIPs Regulation & Key Information Document (KID) in 2024 course is designed by SALVUS Funds and delivered by their Risk & Compliance Director, Evdokia Pitsillidou. This program is suited and recommended for the annual Continuous Professional Development (CPD) requirements of Compliance Officers, Brokerage and Dealing on Own Account Officers, as well as professionals employed by Cyprus Investment Firms (CIF).
Professionals undertaking this course will acquire the skills and competencies necessary for in-depth understanding of PRIIPs and the requirements for the creation of a complete and well-structured KID.
- The Lamfalussy process, the EU Commission & ESMA
- Lamfalussy process
- Level 1 & Framework Acts
- Level 2 & Delegated Acts
- Level 2 & Implementing Acts
- Level 3 & ESMA Guidelines
- Level 4 & Supervision of the member states by ESMA
EU Legal Framework
- Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulatory Framework and Updates
- PRIIPs – Definitions
- PRIIPs – Scope of application
- PRIIPs – Manufacturer
- Products exempt from the PRIIPs Regulation
- Competent Authorities & Infringements
- Understanding the requirements of a Key Information Document
- Key Information Document (KID)
- Client Assessment
- Target Market Identification
- Construct a Key Information Document (KID)
- Thematic review - CySEC Circcular C312
- CySEC Circular C312 – Thematic revie on the Key Information Documents (KIDs)
- KID Format
- KID Language
- KID Content
- Practical Example on how to prepare a Key Information Document (KID)
- Purpose of the KID
- Distributor of the Product
- What is the product?
- What are the risks and what could I get in return?
- What happens if the Company is unable to pay out?
- What are the Costs?
- How long should I hold it, and can I take money out early?
- Other relevant information
- How can I complain?
The Learn the PRIIPs Regulation & Key Information Document (KID) in 2024 course offers materials in both PDF slides and online video recordings, allowing for flexible, self-paced learning. Enrolled learners can study anytime and anywhere at their convenience.
After completing the course, participants can assess their understanding of the material through a set of knowledge-based questions.
Additionally, this course contributes to the annual Continuous Professional Development (CPD) requirements for professionals, including those with CySEC Advanced and Basic certifications.
