PRIIPs and key information on mutual funds
Published: 11 November 2022
Regulation (EU) No 1286/2014 of the European Parliament and of the Council (‘PRIIPs Regulation) regulates key information documents for packaged retail and insurance-based investment products (PRIIPs). Manufacturers of such products shall prepare key information in a standardised document in order to give retail investors access to important information about the product prior to concluding a contract. Regulation (EU) 2017/653 and Regulation (EU) 2021/2268 lay down supplementary requirements for the content of the key information.
The PRIIPs Regulation entered into force in the EU on 1 January 2018, but has not yet been implemented in Norwegian law. Finanstilsynet's implementation proposal has been circulated for comment. On 30 April 2020, it was decided to incorporate the Regulation into the EEA Agreement, subject to approval by the Storting (Decision of the EEA Joint Committee No. 67/2020). Since no proposition has been presented to the Storting, affected actors cannot expect the PRIIPs Regulation to apply in Norway as from 1 January 2023.
Management companies for UCITS funds and national mutual funds that according to national rules are covered by the UCITS Directive's rules on key information, and persons who sell or advise on units of UCITS, are exempt under EU legislation from the requirements of the PRIIPs Regulation through a special transitional arrangement that ends in the EU on 31 December 2022. The fact that the PRIIPs Regulation will not be implemented in Norway at the end of the transitional arrangement has some practical consequences. In a situation where the PRIIPs Regulation will not apply in Norway after the end of the transitional period, affected actors may until further notice act as follows as from 1 January 2023:
- Marketing of foreign UCITS in Norway:
With respect to UCITS funds established in the EU intended to be marketed to retail investors, key information shall be prepared according to the PRIIPs Regulation after 31 December 2022. A number of UCITS funds established in the EU have been passported for marketing in Norway. As regards these funds, Finanstilsynet will not, after the end of the transitional arrangement, require that key information be updated and maintained in accordance with the UCITS Regulation. Key information prepared in accordance with the PRIIPs Regulation may be used for marketing UCITS funds established in the EU in Norway as from 1 January 2023. As from the same date, this also applies to new notifications of cross-border marketing to Norway of UCITS funds established in the EU. Finanstilsynet assumes that key information according to the PRIIPs Regulation will be prepared in Norwegian.
- Marketing of Norwegian UCITS in an EU state:
Finanstilsynet will facilitate the submission of notifications to a host state authority of marketing in an EU member state where key information has been prepared in accordance with the PRIIPs Regulation for use in the country in which the fund is to be marketed.
- Marketing of Norwegian mutual funds in Norway:
With respect to mutual funds established in Norway intended to be marketed in Norway, key information shall be prepared in accordance with Section 8-3 of the Securities Funds Act and Section 8-2 of the Securities Funds Regulations, cf. Regulation (EU) No 583/2010. Key information according to these regulations (UCITS-KID) shall be provided to investors prior to subscription of units in Norwegian mutual funds pursuant to Section 8-4 of the Securities Funds Act.
- Due care when selling and advising on mutual funds:
As of 1 January 2023, there may be two types of key information in the Norwegian market for mutual funds. The requirements for key information under UCITS and PRIIPs are intended to meet customers' needs for easily understandable information about the fund, but the requirements differ in some respects. For instance, the risk is calculated using different methods, which may give a lower risk score when using PRIIPs. This means that mutual funds will not be fully comparable when using key information prepared according to different sets of rules. Distributors of mutual funds must pay particular attention to these differences when advising on and selling mutual funds.
The Ministry of Finance's consultation on Finanstilsynet's consultation document from 2016 on the implementation of the PRIIPs Regulation in Norwegian law: