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Packaged Retail and Insurance-based Investment Products (Priips) regulation
Priips include packaged retail investment products, where the amount repayable is subject to fluctuations because of exposure to reference values or to the performance of assets not directly purchased by the retail investor. They also include insurance products where the maturity or surrender value is wholly or partially exposed to market fluctuations.
The Priips regulation, which came into force in the European Union in 2018, requires sellers of these products to provide a key information document (Kid) to investors. The Kid contains certain information that was not always transparent before. This includes the name of the product and identity of the provider, the types of investors it’s intended for, the risk and reward profile and the maximum loss.
More controversially, issuers must also provide a performance projection for the product under different market conditions. Dealers must follow a prescribed methodology, which can produce results some see as overly optimistic.
The rules also require issuers to provide a simple breakdown of the risks and costs of each product so buyers can easily compare performance across investments. However, some complain that differences in calculation methodology between issuers make comparisons impossible.
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