PRIIPs Annual Refresh

Background

Our client is one of the largest European Investment Managers and operates over 140 funds marketed in the EU. With the introduction of the Packaged Retail & Insurance-based Investment Products (PRIIPs) regulation in 2023, our client had a requirement to review the information contained in the Key Information Documents (KIDs) every time there is a material change and, at least, every 12 months following the date of the initial publication of the KIDs. Our client’s key objective was to review all published documents and refresh the documents requiring updates.

The client engaged PryceWilliams to support the delivery and governance of this annual refresh.

Approach

Our approach included project mobilisation, scope identification, and delivery of the updated KIDs. The project approach was delivered in three key phases:

1. Planning;
2. Identification of share classes in scope; and
3. Delivery.

Analysis Performed

We completed a comprehensive analysis with input from the business subject matter experts (SMEs), which identified the following areas of the PRIIPs KID as subject to potential material change:

• Narratives - Such as a material change to the investment objective, policy or risk factors where deemed as material by the organisation’s Legal & Compliance teams.
• Summary Risk Indicator (Calculation) - A move in the SRI which has been consistently observed over the last 16 weeks, as defined by the regulation.
• Performance Scenarios (Calculation) - 5% move in the Moderate Performance scenario as defined by the regulation.
• Costs (Calculation) - Such as a 25-basis point check on Transaction Charges movements where deemed as material by the organisation’s Legal & Compliance teams.

A full review of existing published KIDs was undertaken with a comparison against the relevant refreshed data. Tolerance thresholds (as per the PRIIPs RTS) were applied to identify all impacted share classes where material change was applied, and an updated KID was required. Using the evidence provided by the internal SMEs, the impacted scope was prepared, validated, and shared with the vendor.

The approach to the update was shared with all parties throughout the project, with sessions organised to ensure clarity with both the client and vendor.
Following the provision of the scope, the vendor was requested to provide timelines for the production and review of the refreshed KIDs. The outcome of these reviews was collated into a single document, and the analysis was shared with the management board for approval, providing reassurance to stakeholders that good governance had been applied. Once approved, the refreshed documents were filed with the necessary regulators and published online.

Conclusions

Our engagement delivered the following outcomes:

1. Timely delivery of the required annual regulatory refresh;
2. Ensured cost-efficient approach; and
3. Provided a suitable governance framework for the Management Board.

By focusing on three key phases: planning, scope identification & delivery, we successfully achieved regulatory compliance for the client. Our analysis allowed business SMEs to focus their attention on their impacted areas while providing comfort to the stakeholders that business needs had been met. Through our successful execution, we have enabled our client to remain PRIIPs compliant for their European fund range offering and utilise our framework for any future updates to the KIDs.

Recommendations

The PryceWilliams team recommends that organisations facing similar regulatory requirements will need a robust planning & engagement exercise. Our approach to the annual update will ensure that regulatory compliance requirements are achieved alongside efficient use of resources. This allows organisations to approach deadlines with the assurance that BAU resources will not be impacted by change management. Frequent monitoring in tandem with robust processes maintains regulatory compliance whilst establishing feedback loops to ensure that the processes continue to develop an efficient use of resources and time.

Next Steps

PryceWilliams provides specialist consulting and project delivery services for investment management firms with regulatory compliance needs. Our focus is supporting the project sponsor to ensure project implementation is delivered on time and within budget. Should you need support with a current refresh or require additional assistance with an ongoing refresh, then contact us to discuss your requirements.