Fund groups not ready to meet PRIIPs Regulation deadline

With one of the final barriers to implementing the changes to the PRIIPs Regulation now removed, research from FE fundinfo has found that fund groups will still struggle to meet the end of year deadline.

In a white paper, ‘Preparing for PRIIPs’, which is published today by the fund data and technology company, it is revealed that despite EIOPA’s final agreement to the outstanding Regulatory Technical Standards (RTS) in February, one in eight fund groups believe they will not meet the 31 December deadline. A further 38% meanwhile revealed they have yet to even start their PRIIPs KID production, despite being hopeful they will meet their deadlines.

Disagreements at policy level and fulfilling the vast data requirements of PRIIPs KID production were cited as the two main reasons why fund groups might struggle. A quarter of fund groups identified the well-publicised delays to signing the RTS as being their chief concern, while 23% said producing and gathering the necessary data required by a PRIIPs KID will present challenges. Additional barriers to meeting the deadline included the cost and time constraints the regulation will place on operations (13%), clarity over what products are included within the regulations (11%) and the dissemination of documents to third parties and fund distributors (8%).

Mikkel Bates, Regulations Manager at FE fundinfo, said:

“It is really not surprising that so many fund groups are struggling to meet the PRIIPs deadline. While EIOPA’s agreement should bring some much-needed clarity at policy level, there are still potential hurdles to be overcome within both the European Parliament and Council which could further delay implementation. With less than a year to go, every day is critical for fund groups, given that we know from UCITS KIIDs, the time and resources required for their production. It is time that fund groups don’t have, so it is no wonder they are concerned.”

Despite these concerns, the research also revealed that fund groups are taking proactive steps to prepare themselves as best they can. Nearly 40% say they have invested in their technology provision in order to meet the data requirements, while the same amount have attended or joined a technical event or seminar, 35% meanwhile have outsourced PRIIPs KID production entirely.

Mikkel Bates added:

“The administrative burden placed on fund groups by PRIIPs KIDs cannot be underestimated. New documents need to be prepared annually for every active share class, where information pertaining to performance, risk, costs and charges are required to be published, which is both time consuming and costly. Factor in that many can soon become out of date when markets are volatile as we saw last year, it is not inconceivable that PRIIPs KID production becomes a whole-year enterprise. It is good therefore to see that fund groups are preparing as best they can and considering investing in technology and outsourcing when necessary.”

Click here to download the full report.