Retail investors – PRIIPs / KIDs

Although private equity and venture capital funds are typically marketed to institutional investors, some funds also market to other investors that do not meet the definition of a professional investor under MiFID II.

The Packaged Retail Investment and Insurance-based Products Regulation (PRIIPs) is an EU framework, onshored into UK law during the Brexit process, which requires that when an investment product is marketed to a retail investor, it must be accompanied by a Key Information Document (KID). The KID should provide short, clear and comparable information written in accordance with a common standard so that retail investors can better understand the risks and costs associated with an investment decision.

There are a number of well-publicised concerns with the PRIIPs framework by industry in the EU and UK, and policymakers in both jurisdictions are considering potential amendments. In the UK, the BVCA is engaged with the FCA review of the PRIIPs disclosure regime, which looks at addressing the lack of clarity on the PRIIPs scope; misleading performance scenarios and summary risk indicators; and concerns with elements of the transaction costs methodology. The European Commission and European Supervisory Authorities are reviewing the EU’s PRIIPs regime in parallel, and the BVCA remains in close contact with Invest Europe on this file.