Date: 13th January 2020

BETTER FINANCE's response to the European Supervisory Authorities' (ESAs) Joint Committee (JC) public consultation paper concerning amendments to the PRIIPs KID (JC 2019 63, 16 October 2019)
Link to consultation:
Link to paper:


General approach and review

As mandated by EU Law, the review process should have started with the Level 1 legislation in order to address key issues in the design of the PRIIPs KID; it would have offered the opportunity for proper consumer testing, focusing on risks, performance, and cost methodologies.

The PRIIPs Regulation still requires the European Commission to review it by 31 December 2019, while this Level 2 review is expected to be finalised in the second quarter of 2020.

This public consultation still constitutes a “quick fix” and will not be sufficient to effectively address all the issues that cause consumer detriment in the current disclosure document for PRIIPs. However, several of the fixes proposed by the ESAs would benefit individual savers and investors.

Future performance review

Future results cannot be accurately predicted, irrespective of the method applied. However, the new approach brings several advantages – such as better capturing the actual performance between the favourable and unfavourable scenarios – but estimates the returns of the underlying portfolio, and not of the PRIIP. Moreover, it generalises across PRIIPs, requires supplementary explanations and reduces comparability.

BETTER FINANCE proposes to replace the stochastic model of estimating returns with illustrative scenarios, where it would be shortly explained to the individual saver what could happen with the investment at a certain period of time and under certain market conditions (favourable, unfavourable, moderate).

Inclusion of

past performance

Past performance is a pivotal element for making an informed investment decision. While past performance is not a reliable indicator of future results, it does show whether the asset manager achieved its stated investment objectives in the past. Past performance of the product (when available) should be presented in comparison with that of the capital market benchmark chosen by its manager on at least 10 years periods (or maximum available time span, if the product is younger).

Costs presentation

The future Reduction-in-Yield (RiY) is not a meaningful indicator of costs and causes confusion even for professional/ knowledgeable investors. Moreover, there is no standardised point in time on which the RiY is calculated in order to enable comparability.

The costs section of the PRIIPs must be simplified and allow comparison with other products. Presentation of costs both in percentage (%) and monetary figures (€/$/£) is necessary to ensure investors understand the impact of fees and charges on their returns.

Costs for MOPs

Key Information Documents (KIDs) for Multi-Option Products (MOPs) must provide the total aggregate cost per investment option. It is not up to the individual investor to try to compute the total charges he has to pay. BETTER FINANCE proposes to the ESAs to require product manufacturers to distribute one individual KID per investment option, in accordance with Article 8 of the PRIIPs Regulation.

This response does not constitute the actual response form required by the ESAs JC, but a stylised version. To see the actual submitted response form, click here.