Information for Retail Investors

The Commission wants to help retail investors (consumers purchasing financial products) to make better-informed decisions on purchasing financial products by providing them with accompanying “Key Information Documents”, called “KIDs” for short (no, we are not kidding). These KIDs would be short, plainly-worded documents – no more than a few pages long – that let investors know about the features, risks, and costs involved.


There is a very wide range of retail investment products currently sold to EU consumers. These products are complex, and information is often written in a highly technical manner. As a result, consumers often do not fully understand the risks or costs they are undertaking. This has undermined consumer trust in financial services.

The EU therefore wants to create a consistent approach, which is crucial for comparing different products, including those sold across the EU and not only in one Member State. Consumer-friendly, easy-to-compare documents about investments should therefore always be available. The Commission has proposed a Regulation to this effect.

Scope of the proposal

The Regulation would apply in general to all investment products, though some products would be excluded. The excluded products would be: 
• Plain shares and bonds which only contain direct holdings
• Products where the rate of return is set in advance and it is not subject to fluctuations in values of other assets
• Non-structured deposits (which are determined by an interest rate such e.g. EURIBOR)
• Pure insurance products
• Occupational pension schemes
• Mandatory pension products financed by the employer

Financial services involved in investment products would be responsible for drawing up of the KID.

Elements of the Key Information Document:

The proposal specifies which elements of the investment product should be described in the KID. The Commission stipulates that the KID should be accurate, fair, clear and not misleading. The layout, characters used, colours and corporate logos displayed should therefore not in any manner distract retail investors or diminish the comprehensibility of the document. Jargon and technical terms should be particularly avoided.

The KID should be a stand-alone document. Retail investors should be able to understand it without being required to read other documents. Also, all manufacturers would be required to drawn up KIDs in a common format to allow the comparability between different investment products.

To facilitate the comprehensibility of the KIDs, they would be required to contain the following sections:

What is this investment?

This section would explain the main features of the product: 
• The type of the investment product
• Objectives and the means for achieving them
• Details of possible insurance benefits
• The term of the investment product
• If relevant, performance scenarios

Could I lose money?

This section would briefly indicate whether loss of capital is possible or not, specifying:
• Any guarantees or capital protection provided
• Whether the investment product is covered by a compensation or guarantee scheme

What is it for?

This section would include:
• Minimum holding period
• Expected liquidity profile
• Possibilities and conditions for any disinvestments before maturity

The document would also contain information on what risks there are, and what investors might expect to get back. The document would also detail all direct and indirect costs. The Commission proposal also indicates that the past performance of the product could also be of relevance. In the case of pension products, the KID should clearly describe possible future outcomes.

The Commission would be empowered to adopt delegated acts that would specify the details of the structure, format and the content of the KIDs. Financial services involved in investment products would be required to review the information contained in the KIDs regularly. The Commission would adopt delegated acts covering the frequency for reviewing KIDs, and the conditions for revision.


If an investment product is sold with a KID which does not comply with the format, structure and content required by the proposed Regulation, retail investors may claim from the manufacturer damages for any loss caused. The manufacturer would always have the burden of proof as regards the compliance of the KID with the provisions of the Regulation.

Provision of the "KID"

Any person selling an investment product would be required to provide the KID to retail investors. Moreover, it would be required that the retail investor receives the document in good time before the investment decision is taken.

In some cases this obligation could be derogated:
• Distance sales, if it is impossible to provide the KID before but the seller informs the retailer
• Successive transactions of the same investment product carried out by the seller on behalf and under the instructions of a retailer investor

The KID would be in any case provided free of charge. It could be provided in different means: on paper, on a website, or using other durable means. In the case of a website, the KID should be address personally to the retail investor unless she or he consents otherwise.

Complaints, redress and sanctions

Investment product manufacturers would be required to create a procedure that allows investors to submit complaints in relation to the KID and receive a proper reply. In addition, it includes measures to ensure effective access to dispute resolution procedures and redress. Member States would be required to create a sanctioning system to guarantee the compliance with the Regulation.

Transitional provision for Collective Undertakings, and review clause

A transitional period would be included to allow Undertakings for Collective Investment in Transferable Securities (UCITS) to continue using their new and specific information document scheme (Directive 2009/65/EC) for five years from the entry into force on this proposed Regulation.

After that five years period, the Commission would assess how UCITS should be treated and whether to prolong the validity of the information document scheme for UCITS, repeal the provisions on the UCITS information document, or continue with the UCITS rules but making that document equivalent to the KID under this proposed regulation.

Next step and entry into force

The proposal will now be sent to the European Parliament and the Council for examination following the ordinary legislative procedure. The Regulation could be expected to enter into force by the end of 2014. The Regulation would be reviewed two years after its entry into force.