Getting to grips with Priips

After months of planning, EU regulations Mifid II and Priips finally came in to full force last week, but uncertainty around what it means for US funds on platforms remains.

Getting to grips with Priips

Last week, platforms such as Hargreaves Lansdown, AJ Bell and Tilney began cracking down on certain investment trusts and exchange traded funds (ETFs) as providers failed to comply and provide the correct documentation.

The Priips (Packaged Retail Insurance-based Investment Products) regulation requires each fund to have a Key Information Document (Kid) available online for investors from 1 January. Those that didn’t were temporarily removed from the platforms by Hargreaves Lansdown and Tilney.

Hargreaves Lansdown said: “US domicile funds which don’t comply with the Priips rules have been removed from our website. Very few people invest in these funds, most people invest in European domicile ETFs, so it has had little investor impact.

“As with any other investment on the platform, we ensure that all the relevant documentation is available to investors and if it is not, we withdraw the investment from our website.”

Although some trusts that were initially suspended became available again later, platforms in general are having to clean up to comply with the regulations.

Jason Hollands, managing director at Tilney Group, said: “Many platforms, including Bestinvest, use the services of third-party data providers, including for links to Kids – that makes sense given the thousands of options available.

“We identified a handful of trusts last week where there did not appear to be Kids in place, but this was quickly resolved in most cases as Kids were being put in place during the week. There were no issues where clients wanted to deal on any of these but couldn’t.

“Bestinvest doesn’t offer access to US domiciled trusts or ETFs, so this wasn’t a big deal for us.”

However, although Hollands states that it has little impact for Bestinvest, questions arise over the impact of these new regulations on the industry.

What will happen to US domiciled trusts or ETFs that do not bother with the hassle of complying with EU regulations? Will they just become no longer available on UK platforms?

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