The European Commission's proposals on Packaged Retail Investment Products, or Prips, are rapidly rising to the top of the regulatory agenda. Although Commission rhetoric seeks to connect the Prips initiative to post-crisis re-regulation, the reality is that, as with hedge funds, these proposals had been in discussion for some time.
The origins of the Prips concept probably lie in the UK packaged products regime. When the UK Financial Services Act of 1986 unified the regulation of the sale of units in unit trusts and investment life assurance policies, the regulators developed a common set of rules that were applied to the marketing and selling of both types of products – referred to as packaged products. The EU regime captures both of these types of product, but is much wider in its scope, and is intended to include warrants, derivatives, shares in investment companies and index-linked deposit accounts.
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