It does not appear to include non-Ucits funds within the two-year delay.
The EU parliament said Article 32 in the Kid section within the Priips regulation will be amended from “31 December 2019” to “31 December 2021”.
Article 32 now says management companies, investment companies and people advising on or selling Ucits funds shall be “exempt from the obligations under this regulation until 31 December 2021”.
Non-Ucits ‘left out in the cold’
Ian Sayers, chief executive of the Association of Investment Companies (AIC), said: “The expected delay to Kids for Ucits funds is welcome but leaves investors in non-Ucits funds out in the cold.
“Recent EU proposals to reform Kids do not address their fundamental failings and will either do no good or make matters worse. Investors now face being misled by Kids for years to come.
“As the EU appears unwilling or unable to protect non-Ucits investors, the FCA should take the lead and warn investors not to rely on these documents.
“It should ensure that the misleading information in Kids does not pollute other areas of the market, for example by prohibiting it from being used in financial promotions and in search filters on websites.”
As a result of the Kid delay for Ucits funds, the EU Parliament has also made several amendments to Article 33 of the Kid section within the Priips regulation.
Dates in Article 33(1), Article 33(2) and Article 33(4) will now be amended to “31 December 2019” from “31 December 2018”.
Article 33 (1) now says “By 31 December 2019, the Commission shall review this regulation”. The review will consist of a general survey of the “operation of the comprehension alert”, a survey of the practical application of the rules laid down in the regulation including developments in market, feasibility, costs and benefits of social and environment investments.
The Commission will also undergo consumer testing and an examination of non-legislative options as well as the outcomes of the review.
Article 33 (2) has been amended to “the Commission shall assess, by 31 December 2019, on the basis of the work undertaken by European Insurance and Occupational Pensions Authority (Eiopa) on disclosure of product information requirements”.
Lastly, Article 33(4) has been changed to “by 31 December 2019, the Commission shall conduct a market survey to determine whether online calculator tools which allow the retail investor to compute the aggregate costs and fees of Priips are available and whether they are free of charge.”
It also says: “The Commission shall report on whether those tools provide for reliable and accurate calculations for all products within the scope of this regulation.”
James Pearcy-Caldwell, chief executive of UK advice firm Aisa, added: “This is not entirely surprising when you consider that even simple matters such as ongoing charges figures (OCR) cannot be relied upon for comparison.
“As each fund management group interprets the rules in its own ways, and with little guidance from the regulators it is being left to individual firms to work out how to present aggregate disclosure figures to clients.
“Even worse, downloading Kids and Kiids already available show a wide variation of information. The key question is who is all this really for? If consumers are meant to be better informed it is a complete mess, and feedback we are getting is that they have little interest in the information.
“The Esma ratings are not far off being a joke, being volatility based and likely to lead to large variations between periods of stability and volatility. They bear no similar comparison to any risk rating applied in the UK that I am aware of.”
In November, the European Supervisory Authorities (ESAs) unveiled a series of reforms to the Kid requirements under the proposed Priips regulations and were looking for industry feedback.