The European Commission’s Retail Investment Strategy, published in May 2023, would redesign the PRIIPs KID (key information document), adding a “product at a glance” dashboard and a new sustainability section to the document every UCITS has been producing for retail investors since January 2023. Most of the headlines went to inducements and value for money, and it’s still only a proposal, but the KID changes are worth understanding now because the KID sits at the end of a long data chain. The PRIIPs KID is the standardised document that summarises a product’s costs, risks and potential returns so that retail investors can compare products.
What is in the package?
The strategy is made up of two legal texts. A proposed omnibus directive amends MiFID II, the Insurance Distribution Directive, the UCITS Directive, AIFMD and Solvency II, while a proposed regulation amends the PRIIPs Regulation itself.
The Commission adopted both on 24 May 2023, and they now sit with the European Parliament and the Council, each of which needs to settle its position before negotiations can begin. The package as a whole is aimed at making it easier and cheaper for people to invest.
Where does the UCITS KIID stand?
It helps to start with a reminder of where things are today. The PRIIPs exemption for UCITS ended on 1 January 2023, and under the UCITS Directive as amended by Directive (EU) 2021/2261, a UCITS that produces a compliant PRIIPs KID is treated as meeting the key investor information requirements, so it doesn’t also need to produce a UCITS KIID (key investor information document).
For retail investors, then, the KID is the document. The Retail Investment Strategy builds on that position, because its document changes are aimed at the PRIIPs KID rather than at bringing the KIID back.
What changes in the PRIIPs KID?
The proposal makes several changes to the content and delivery of the KID:
- A “product at a glance” section: a dashboard near the top of the KID would summarise the type of product, the summary risk indicator, the total costs, the recommended holding period and whether there are insurance benefits.
- A sustainability section: a new section headed “How environmentally sustainable is this product?” would give harmonised information on the product’s sustainability profile, including the minimum proportion of environmentally sustainable economic activities and the expected greenhouse gas emissions intensity, with the detail set in technical standards.
- No comprehension alert: the warning that a product is “not simple and may be difficult to understand” would be deleted.
- Digital by default: the KID would be provided electronically unless the investor asks for paper, which must then be free, and layering would be allowed with the dashboard as the first layer. The explanatory memorandum also notes that KID information could become machine readable through implementing acts under the separate European Single Access Point (ESAP) proposal.
The amended PRIIPs rules would apply 18 months after entry into force.
What else is in the Retail Investment Strategy?
Beyond the KID, UCITS management companies would need a pricing process to assess whether their funds offer value for money, compared against cost and performance benchmarks that ESMA would develop and publish. Payments from manufacturers to distributors would be banned for execution-only sales, where no advice is given.
New MiFID rules would also require marketing communications to be clearly identifiable, fair, clear and not misleading, and balanced between risks and benefits. Member states would transpose the directive within 12 months of entry into force and apply it from 18 months.
What it means in practice
For document teams, the KID would gain two new data-hungry sections. The dashboard draws on numbers you already hold, such as the risk indicator, total costs and holding period, but puts them front and centre, so any inconsistency with the factsheet or website becomes more visible.
The sustainability section brings SFDR-style data into a document that has, until now, been largely silent on sustainability. A move to electronic, layered and potentially machine-readable KIDs also means the KID starts to look less like a PDF and more like a data feed.
For distribution and product teams, value for money will mean documenting how costs are justified and comparing them against ESMA benchmarks, which depends on clean, consistent cost and performance data across share classes.
The Retail Investment Strategy timeline
- 1 January 2023: the UCITS exemption from the PRIIPs KID ends
- 24 May 2023: the Commission publishes the Retail Investment Strategy proposals
- Now: the Parliament and the Council are working on their positions
- Next: negotiations between the institutions, followed by a final text
- 18 months after entry into force: the amended PRIIPs rules and the omnibus directive would apply
What to do now
- Trace the dashboard data, confirming that your risk indicator, total costs and holding period all come from one governed source.
- Plan for sustainability data in the KID by checking that you can supply Taxonomy alignment and emissions intensity for each product.
- Follow the negotiations, because the final text could change the sections, the layout and the dates.
None of this is law yet and the detail will move, but the direction points towards fewer pages, more structure and closer scrutiny of every number, which favours firms that generate their KID from data rather than typing it into a template.
At Kurtosys we help investment managers keep their fund data governed and consistent, so the same numbers flow into factsheets, regulatory documents like the KID, client reports and fund websites. When the KID gains new sections, that’s one change to the data and the template rather than hundreds of manual edits. If you’d like to talk through what the Retail Investment Strategy could mean for your documents, get in touch.
Sources: European Commission: retail investment strategy, proposed regulation amending PRIIPs, COM(2023) 278, proposed omnibus directive, COM(2023) 279, Directive (EU) 2021/2261, as at 1 November 2023.
About this article
This article reflects the position at 1 November 2023 and was checked against the primary sources available at that time. Thomas Bjerkén, our regulatory reporting and fund data specialist, joined Kurtosys after it was published and now looks after our regulatory content. The Retail Investment Strategy has moved on since. For the latest position, see PRIIPs KID changes: European Parliament sets final vote on the retail investment package.
