PRIIPs proposal and likely timing of entry into force in Norway

The Ministry of Finance has recently presented a proposal to Parliament (Prop. 51 LS 2023-2024, available in Norwegian here) for an act on key information documents for packaged retail and insurance-based investment products (the "PRIIPs Act"). 

The PRIIPs Act implements Regulation (EU) No 1286/2014, together with a mandate to the Ministry to implement Regulations (EU) 2016/2340, (EU) 2016/1904, (EU) 2017/653 and (EU) 2019/1866 (together, the "PRIIPs Regulation") though regulations to the PRIIPs Act. 

We expect the PRIIPs Act to enter into force in Norway later this year, likely on 1 August 2024 (please note that the NFSA has stated that already from 1 January 2023 a foreign UCITS which is to be marketed to retail investors in Norway is required to provide a PRIIPs KID prepared in Norwegian).

The PRIIPs Regulation

The PRIIPs Regulation shall ensure that consumers and other non-professional investors to receive proper information about the characteristics and risks of complex and insurance-based investment products, so that they are better able to understand and compare the products before making investment decisions. 

Information about the product must be summarised in a key information document ("KID"). Generally, the information must be accurate, clear, brief and precise. The document should be no longer than three A4 pages and should contain sections with specified content. The PRIIPs Regulation also provides rules on when and how a KID should be provided and requires the document to be kept up to date. Detailed rules on the format, content, availability and updating of the KID are set out in Commission Delegated Regulation (EU) 2017/653 (as amended).

Substantive scope 

Products:

PRIIPs include both (i) packaged retail investment products ("PRIPs") and (ii) insurance-based investment products ("IBIPs"). The common denominator for all PRIIPs is that the risk profile, cost burden and return potential can be difficult to understand.

PRIPs are investments where the amount to be paid back to the investor may vary due to changes in benchmarks or the performance of assets not directly purchased by the investor. Examples of PRIPs are units in mutual funds and AIFs, structured bank deposits and derivatives.

IBIPs are insurance products where the value at maturity or surrender is fully or partially exposed to market fluctuations. This includes, for example, life insurance policies with investment options.

The PRIIPs Regulation explicitly lists certain products that are exempt from the Regulation. The list includes both products that by their nature would fall outside the definition of a PRIIP in any event, such as non-structured bank deposits and financial instruments where the investor becomes the direct owner, but also certain products that would otherwise be covered. In relation to the Norwegian market, the Norwegian Financial Supervisory Authority ("NFSA") pointed out in the consultation paper that, among other things, paid-up policies with investment options and individual pension schemes (IPS) (both pension savings agreements and pension insurance agreements) with investment options will be products that by their nature would be covered. The PRIIPs Regulation allows for national choices on this point; see point on gold-plating below.

Types of entities:

The PRIIPs Regulation applies to manufacturers and distributors of PRIIPs, as well as those who provide advice on PRIIPs. The rules are therefore relevant to banks, insurance companies, investment firms, investment fund management companies and AIF-managers, among others.

It is the responsibility of the manufacturer of the PRIIP to prepare the key information document.

It is the responsibility of the distributor (which may also be the manufacturer) or the adviser to make the key information document available to the investor. This must be done in sufficient time before the investor becomes bound by a contract or offer relating to the PRIIP.

Goldplating measures in Norway 

The PRIIPs Act implements the PRIIPs Regulation in Norwegian law by incorporation, and as a starting point no 'gold-plating' measures apply in Norway. The PRIIPs Act further contains necessary provisions on administrative measures, infringement fines and penalties, and a provision on confidentiality. 

However, the proposal for a PRIIPs Act also includes an authorisation for the Ministry to expand the scope of the PRIIPs Act, so that the Ministry, by enacting delegated regulations, may introduce requirements for equivalent information when offering other types of investment products than those covered by the PRIIPS Regulation.

In the NFSA's consultation paper in 2017, the NFSA expressed the view that a number of pension products, all of which are excluded from the Regulation due to their special characteristics and objectives, should be covered by the Norwegian rules. At the time, the NFSA referred to, among other things, paid-up policies with investment options (Nw. 'fripoliser') and individual pension schemes with investment options (Nw. IPS), including both pension savings agreements and pension insurance agreements. The Ministry believes that a broad consultation on any regulation expanding the scope of the PRIIPs Act should be carried out before any decision is made, and it remains to be seen whether the expanded scope becomes a reality.

For completeness, it should be noted that Norwegian law already includes several sectoral information requirements for non-professional investors for investment products covered by the PRIIP definition, such as section 16-2 of the Financial Institutions Regulation (packaged investment products), section 9-5 of the Securities Trading Act (structured deposits), sections 8-3 and 8-4 of the Norwegian Securities Funds Act (key investor document), section 7-2 of the AIF Act and sections 7-1 and 7-2 of the AIF Regulations (key investor document), Chapter 1C of the Insurance Contracts Act and Section 9-2 first paragraph of the Insurance Mediation Act (insurance based products), and Chapter 3 of the Financial Contracts Act (credit-, pension- and payment products).

The PRIIPs Act will replace the existing information requirements in the Norwegian Securities Funds Act and the AIF Act, as they relate to non-professional investors. The other abovementioned provisions will continue to be in force in parallel with the PRIIPs Act.

Going forward

The EEA Joint Committee decided on 30 April 2020 to incorporate the PRIIPs Regulation into the EEA Agreement, but this will not formally take place until all constitutional reservations have been lifted. Liechtenstein and Iceland lifted their reservations in 2020 and 2021 respectively. 

The PRIIPs Act will be considered by the Parliament, and this will likely take place during the Parliament's spring session. In that case, the law would enter into force in Norway from the summer of 2024 at the earliest (we expect from 1 August, together with the CBDF).