Preparing for PRIIPs 2023

If you’re an investment company that manages retail funds in the EU or the UK, odds are high that the European Commission (EC)’s PRIIPs Regulation is currently front-of-mind. The PRIIPs Regulatory Technical Standards (RTS), which came into force in 2018, outlines rules fund managers must follow when creating Key Information Documents (KIDs) for packaged retail investment and insurance-based products (PRIIPs). According to the EC’s revised RTS, which was adopted on September 7, 2021, all managers of a UCITS (Undertakings for the Collective Investment of Transferable Securities) fund will need to transition from providing UCITS key investor information documents (KIIDs) to providing PRIIPS KIDs by the beginning of 2023.

  

The regulation presents a number of complexities for firms to navigate - and they only have a limited window of time in which to do so.

 

Earlier this month, we joined a panel of experts for an in-depth conversation about how firms can prepare for PRIIPs over the coming year. Our own Tamara Vazquez Ruiz, Financial Services Team Lead, spoke with Ronan Brennan, Chief Product Officer at Compliance Solutions Strategies; Sara O’Reilly, Partner at Mason Hayes & Curran LLP; and Mark Sherwin, Senior Adviser, Financial Reporting at the Investment Association. These leaders have their respective thumbs on the pulse of the industry - and they’ve flagged tips and trouble areas that managers will need to consider in the year ahead.

 

Here are our key takeaways from the event.

Since the EC voted to delay enforcement of the regulation for 12 months, investment firms might conclude that they have plenty of time to meet the many data collection and reporting requirements involved. While the additional six months certainly give firms needed breathing room, take it from the experts: those 12 months will speed by without a clear, efficient, strategic plan.

 

For example, the regulation includes a change to the minimum amount of historical data that must be disclosed. Rather than provide data for the past two years, firms will need to provide a minimum of 10 years of data. It could be easy to underestimate the complexity and volume of associated work - so savvy firms should get a head start.

Complying with EU regulations always ushers in a degree of complexity, particularly as any documents need to be available in all languages of the relevant countries - a large undertaking when distributing products across the 27 countries of the EU. Slight discrepancies in regulations in the EU and the UK have added further complications fund managers will need to address.

 

In the EU, the new regulation will effectively end the UCITS KIID. That’s not the case, however, in the UK. Any EU product companies that distribute into the UK will need to transition to PRIIPs KIDs for EU customers while maintaining UCITS KIIDs for UK customers. 

 

That additional complexity means - once again - that firms that sell across borders should begin preparing their documents early.

In a union of 27 countries with 24 official languages, translation will be a critical component of compliance with the EC’s regulation. What’s more, translation of highly sensitive content that requires absolute accuracy necessitates the use of a highly competent and experienced translation partner.

 

The shift from UCITS KIIDs to PRIIPs KIDs will result in a high volume of content that must be translated in accordance with the EU regulations for wording and terminology. Numbers as well as narratives must be localised. And there’s no room for error - everything must be 100% accurate or risk warnings, fines, and reputational damage.

 

To ensure accuracy and compliance at scale, firms need to follow a translation process that is as efficient as possible. Some firms have a false expectation that they can easily reuse UCITS KIIDs in creating their PRIIPs KIDs, but that’s not the case. Those narratives are quite different, and they can’t be copied and pasted.

 

Working with an experienced and reputable translation partner can generate material efficiency. At RWS, for example, we can leverage prepared translation memories and terminology glossaries to expedite the translation process. We can also provide a content audit to identify overlap among the various required disclosures a firm must make, so we can update multiple content modules simultaneously and save time for clients. What’s more, we can generate efficiency while ensuring quality by blending machine- and human-driven translation workflows. Our robust machine translation engines help support the work of knowledgeable, experienced humans with extensive expertise in the financial services sector.

Preparing for the PRIIPs transition can feel overwhelming - but you don’t have to do it alone. RWS specializes in the translation of fund management content, in any format and any language. We have a long history of working with leading financial services firms and are ready to help yours prepare for and execute the complex undertaking ahead of you.

 

To learn more about how we can help you transition from UCITS to PRIIPs KIDs, read our solution brief or contact our team to discuss your unique needs.