Having previously ignored all pleas for a delay to the launch of PRIIPs, the European Parliament threw the issue wide open on 14 September when MEPs voted 602-4 to reject the Regulatory Technical Standards (RTS) submitted by the European Commission.
This is the first time the Parliament has ever rejected RTS, so there is no precedent for how the situation might be resolved.
The RTS contain the “Level 2” details of what calculations are needed and what goes in the sections of the KID that were set out in the “Level 1” regulation back in 2014, with a start date of 31 December 2016. Two years might seem like plenty of time to get the details sorted out, but it was always going to be tight, involving three consultation periods and a lot of work to try to find solutions that work for all PRIIPs.
What are the options?
Now we have no acceptable Level 2 measures, that timescale may be impossible. But going live on 31 December 2016 is still the default option. When MEPs rejected the RTS, they asked the Commission to consider a delay, but the Commission has previously said it intends to go ahead as planned. This leaves us with three possibilities:
- Go live with Level 1 but no Level 2 in place. Unless MEPs vote to delay it, the Level 1 will go ahead as planned, as the start date is in the regulation. With this option, groups should proceed using the current (rejected) RTS, as most of them will remain unchanged and we know which parts the MEPs objected to. This will mean that, while not perfect, at least KIDs will be consistent and comparable, as planned, and changes can be introduced later.
- Rush through revised RTS and go live this year. If revised RTS are submitted in October, that leaves just two months, without any further consultation, to apply the changes. Any revisions to the RTS agreed that quickly would almost certainly be a poor compromise and unlikely to fully satisfy anyone or deliver real consumer protection. And what would happen to groups that fail to achieve this deadline with the new calculations and data requirements?
- Delay for between 3 and 12 months. If MEPs vote to delay PRIIPs, that should be an opportunity to make sure they deliver what they are supposed to. This wouldn’t be done with a three-month delay, especially if it involved another round of consultation.
Twelve months’ delay sounds good, but companies may already have allocated their project resources to deal with MiFID II coming in at the end of 2017, so either they will have to get one of these projects out of the way earlier or stretch their resources very thinly.
Six months’ delay anyone?