In late 2016, the European Union (EU) introduced new rules that require financial firms that produce or sell packaged retail investment and insurance-based investment products (PRIIPs) to provide prospective investors with key information documents (KIDs). Those rule become effective January 1, 2018. The PRIIPS KIDs rules are designed to make it easier for retail investors to compare products to each other by presenting key product information in a uniform format. 

KIDs are short, plainly-worded documents – no more than a few pages long – that provide investors with answers to key questions they have about the features, risks, and costs of investment products. They are designed for retail investors rather than institutions or professionals to help the investor make more informed decisions on whether an investment is right for them. Every KID follows the same structure, answering a standard set of questions, such as: What is the investment? Can I lose money? What are the risks and what might I get back? What are the costs?

A wide range of investment products are sold to European Union (EU) consumers. These investment products are often complex, and information about them is written in a very technical way or presented in a manner that makes it difficult to compare different investments. As such, consumers can fail to properly appreciate the risks, costs or features of products. The financial crisis underlined the impact of this: retail investors lost on investments where the possibility of these losses was not understood beforehand. Investments believed to be safe were not always as safe as they appeared.

While the primary obligation to prepare a KID falls on 'manufacturers' of PRIIPs, such as alternative investment fund managers (AIFMs) and self-managed AIFs, any person selling or advising on a PRIIP to retail investors will be under an obligation to provide a copy of the KID.

A PRIIP manufacturer is any entity that manufactures PRIIPs or makes changes to an existing PRIIP including, but not limited to, altering its risk and reward profile or the costs associated with an investment in a PRIIP.  All self-managed funds, fund managers and distributors of interests in funds that could have retail investors in the European Economic Area (EEA) should consider what steps they need to take to comply in good time for 1 January 2018. EEA unites the EU Member States and the three EEA EFTA (European Free Trade Association states — Iceland, Liechtenstein, and Norway) into an Internal Market governed by the same basic rules.