PRIIPs Regulation – ESMA Call for Evidence – AFPDB position

On the occasion of the Call for Evidence on the European Commission mandate regarding the PRIIPs Regulation, the French association of retail structured product manufacturers (AFPDB) would like to share its views with the ESAs.

Download the full version of the AFPDB contribution 

The AFPDB represents the issuers of structured investment products to retail customers in France. All of the products issued by the AFPDB’s members are subject to the PRIIPs KID requirements. This represents over 1 million of product KIDs issued annually.

In the AFPDB view, the current PRIIPs RTS – as adopted in 2017 – operated rather well. The new RTS which should enter into force in July 2022, if not further delayed, will involve a substantial methodological and IT update with its related change management costs impacting both, manufacturers and distributors.

In light of the recent experience of EU rule making affecting PRIIPs, the AFPDB regrets the lack of thorough impact assessments, consumer testing (based on actual KID and not mere theoretical models) and effective industry experts’ consultation prior to the adoption of such rules.

In the case of the last revised RTS for structured products, the AFPDB deeply regrets that industry feedback was not duly taken into consideration.

As a consequence, the proposed approach for Performance scenarios for autocallables and category 2 KID remains a cause for concern for consumers and manufacturers.

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The AFPDB’s contribution to the consultation focuses on questions and topics targeted at experts which get specific importance to the structured products industry:

• General survey on the use of the KID
• General survey on the operation of the comprehension alert
• Survey on the practical application of the rules
• Use of digital media
• Scope of the PRIIPs Regulation
• Differentiation between different types of PRIIPs
• Complexity and readability of the KID
• Performance scenarios and past performance
• PRIIPs offering a range of options for investment (Multi-Option Products (“MOPs”))
• Alignment between the information on costs in the PRIIPs KID and other disclosures