15 Dec 2011
The majority of KIIDs (Key Investment Information Documents) fall short of respecting the prescribed texts and presentation of information, according to new research by KNEIP, service provider to the global asset management industry, and Ebsylon, financial communication and plain language specialists.
KNEIP and Ebsylon explored the form and presentation of the KIID, section contents, and plain language, in a context of full compliance to the KIID regulations. The study was based on a random sample of 100 KIIDs, which did not specifically include any of KNEIP’s clients, from 29 asset managers in four languages (English, French, German, Italian).
While the content was found to be generally correct, with good attention given to the risk and reward profile section, the research showed that improvements can be made in the form and presentation of the document.
The research showed common problems of inconsistencies within the documents, with figures mentioned in some sections but not others. Many misrepresented the past performance bar chart, elements of the charges table and the KIID disclaimer of authorisation details. Some of the documents also omitted the narrative explanation of the synthetic indicator.
KNEIP and Ebsylon explored the form and presentation of the KIID, section contents, and plain language, in a context of full compliance to the KIID regulations. The study was based on a random sample of 100 KIIDs, which did not specifically include any of KNEIP’s clients, from 29 asset managers in four languages (English, French, German, Italian).
While the content was found to be generally correct, with good attention given to the risk and reward profile section, the research showed that improvements can be made in the form and presentation of the document.
“Broadly, we were impressed with the positive strides the industry has made ahead of July 2012,” said Mario Mantrisi, head of product management and innovation and member of the executive board at KNEIP. “What the research highlights is that asset managers have made excellent progress with the content of the KIID, while the form needs work. While these findings may at first view seem somewhat pedantic, regulations are quite clear in their specifications and leave little room for interpretation of prescribed statements or formatting of various elements. The result is that fund managers distributing KIIDs cannot be assured that the KIIDs would pass the scrutiny of regulators, if checked. This risk is increased by exposure to potential complaints from investors, and the possibility of liability.”
The research showed common problems of inconsistencies within the documents, with figures mentioned in some sections but not others. Many misrepresented the past performance bar chart, elements of the charges table and the KIID disclaimer of authorisation details. Some of the documents also omitted the narrative explanation of the synthetic indicator.
Emmanuel Bégat, managing partner of Ebsylon, said “An overwhelming majority of KIIDs use jargon or technical terms, whereas regulations are clear about the need to avoid them. Ultimately what this research highlights is that the devil is in the detail when it comes to developing 100% compliant KIIDs. With all the resources and efforts being put into creating KIIDs, we feel that it’s worth going the extra mile to get them right.”
