The Council of the European Union (EU) on Monday adopted a regulation aimed at improving market transparency for retail investors.
The regulation is part of a series of measures to boost consumer trust in financial markets. The intention is to ensure that retail investors always receive the information they need to take informed decisions.
The text covers packaged retail and insurance-based investment products (PRIIPs), specifically investment funds, structured deposits and life insurance policies with an investment element.
Retail investors often face confusing and overly complex information about PRIIPs which may make them to purchase unsuitable products, thus undermining the efficiency of investment markets and leading to higher prices.
The regulation requires key information documents to be drawn up for PRIIPs. It lays down uniform rules on the format and content of key information documents and their provisions to retail investors.
The new requirements will be applicable two years after the regulation comes into effect. This will allow those manufacturing PRIIPs, and those advising on or selling them, sufficient time to prepare for the new rules.