Learn the PRIIPs Regulation & Key Information Document (KID) in 2025

1. The Lamfalussy process, the EU Commission & ESMA

The Lamfalussy process, established in 2002 and forms the foundation of the EU’s financial rulemaking. It divides regulation into four complementary levels, allowing laws like PRIIPs, MiFID II, and MiCA to be developed efficiently and applied consistently across Member States. 

At Level 1, the European Parliament and Council of the EU adopt framework legislation and broad directives or regulations, outlining the core objectives and scope.  

At Level 2, the European Commission, with input from ESMA and other European Supervisory Authorities, adopts delegated acts and technical standards to specify the operational details. What is more, ESMA drafts Regulatory Technical Standards (RTS), which are therefore submitted to the Commission. 

Level 3 involves ESMA guidelines, ensuring national regulators apply the level 1 and 2 uniformly, while Level 4 focuses on market supervision of each Member State, where the Commission and ESAs monitor compliance, and national authorities such as CySEC supervise firms directly.  

This structured process ensures that EU financial regulation combines democratic oversight with technical precision, creating a framework that is both adaptable and consistently enforced across the Union. 

2. Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulatory Framework and Updates 

The PRIIPs Regulation (EU No. 1286/2014) sets uniform standards for how insurance-based investment products are disclosed to retail investors through the Key Information Document (KID). Its core purpose is to improve transparency, comparability, and investor protection by ensuring retail clients understand a product’s nature, risks, and costs before investing. 

PRIIPs include packaged retail investment and insurance-based products whose value depends on market performance. The Regulation applies to manufacturers, as well as those advising on or distributing PRIIPs, including credit institutions, investment firms, fund managers, and insurance undertakings supervised respectively by the CBC, CySEC, or the Superintendent of Insurance. 

Products excluded from PRIIPs include non-life insurance, plain deposits, pure protection life contracts, pension products designed primarily to provide retirement income, and occupational pension schemes. However, certain Alternative Investment Funds (AIFs); open or closed-ended, fall under the Regulation when marketed their units to retail or to well-informed investors. 

Competent authorities such as CySEC may impose sanctions, suspend marketing, or issue public warnings for non-compliance.  

3. Understanding the requirements of a Key Information Document (KID) 

The Key Information Document (KID) is a short, stand-alone disclosure that enables retail investors to understand and compare investment products easily. It must be clear, fair, and not misleading, written in simple language, and limited to three A4 pages. 

Manufacturers or distributors must provide the KID before any transaction is concluded, ensuring clients can assess a product’s suitability. It should be available in the official language of the Member State where the product is marketed; though some Member States such as Cyprus, also accepts English. 

Each KID outlines the purpose and features of the product, its risks and potential returns (with a Summary Risk Indicator and performance scenarios), all associated costs, and the recommended holding period. It must also explain what happens if the provider cannot pay out, referencing the Investor Compensation Fund (ICF), which protects investors up to the lesser of €20,000 or 90% of their claim. 

Finally, the KID must include contact details and guidance on how to complain, and direct investors to additional documents on the distributor’s website. In essence, the KID ensures transparency, comparability, and informed decision-making for retail investors. 

4. CySEC Circular C312 – Thematic Review 

On 16 May 2019, CySEC published its first thematic review (Circular C312) on the implementation of the PRIIPs Regulation and MiFID II, approximately 1.5 years after their introduction. The review focused on the content, format, and presentation of KIDs prepared by Cyprus Investment Firms (CIFs). 

CySEC observed several common shortcomings, including:

• Failure to issue a separate KID for each investment product;
• Non-compliance with the three-page limit;
• Lack of translation into the official language of the host Member State;
• Inclusion of marketing content, which should be strictly excluded from KIDs; and
• Insufficient detail regarding risks, costs, holding periods, and compensation mechanisms.

The review also highlighted the omission of references to the Investor Compensation Fund (ICF) and inadequate explanation of complaint procedures. CySEC reiterated that the KID’s purpose is to ensure investors understand the product’s structure, risks and costs before investing.

Final Thoughts

The PRIIPs Regulation and its Key Information Document (KID) play a crucial role in strengthening retail investor protection across the EU. By mandating clear, standardised, and comparable disclosures, they enhance transparency and build investor confidence in financial products.

In response to this demand, SALVUS Funds, in collaboration with the Institute for Professional Excellence (IforPE), presents a self-study course titled “Learn the PRIIPs Regulation & Key Information Document in 2025”. Drawing on the extensive expertise of the SALVUS Regulatory Compliance team, the course provides practical insights into PRIIPs implementation and KID preparation. Participants will gain the knowledge and tools required to produce compliant, investor-focused disclosures aligned with EU and CySEC standards.

The SALVUS Regulatory Compliance team continues to support investment firms, funds managers, and insurance undertakings in meeting their PRIIPs and MiFID II obligations, form document preparation and translation to ongoing regulatory reviews.

For more information, contact us at compliance@salvusfunds.com.

#StayAhead

Should you be interested to read more about investor protection, product governance, or disclosure requirements under EU regulation, please visit selected articles below:

• Providing Investment Advice & Portfolio Management under MiFID – SALVUS Funds
• Investor Information & Product Governance for CySEC-Regulated Entities – SALVUS Funds
• CIF Organisational & Operational Requirements and the Safeguarding of Client Funds – SALVUS Funds
• The 6 Areas of EU Regulatory Compliance – SALVUS Funds
• An Effective Planning Ahead of a CySEC Inspection – SALVUS Funds

The information provided in this article is for general information purposes only. You should always seek professional advice suitable to your needs.