EIOPA’s product intervention powers

On 1 January 2018 the Packaged Retail and Insurance-Based Investment Products Regulation (PRIIPs) will introduce product intervention powers for national competent authorities and EIOPA.

Here a brief description of the key features of these powers:

When will EIOPA have the product intervention powers in place?

Product intervention powers will come into force as of 1 January 2018, the date of the entry into application of the Regulation on key information documents for packaged retail and insurance-based investment products, No 1286/2014 (PRIIPs).

Who will have the product intervention powers?

EIOPA, under Article 16 of PRIIPs, and national competent authorities, under Article 17 of PRIIPs.

The other two European Supervisory Authorities, the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) and their national competent authorities, will have similar intervention powers under the Markets and Financial Instruments Regulation (MiFIR). The entry into application of the intervention powers for these authorities is also 1 January 2018.

What are the financial products that can be subject to an intervention?

Products subject to a restriction are products as defined in Packaged Retail and Insurance-Based Investment Products Regulation such as insurance-based investment products.

To what type of entities product intervention powers can be used against?

The entities against which these powers can be applied are insurance undertakings, manufacturers of insurance-based investment products and persons advising on or selling insurance-based investment products.

What are the differences between measures adopted by EIOPA and measures adopted by national competent authorities?

  • Duration of the measure:

Measures adopted by EIOPA under Article 16 of PRIIPs are temporary and cannot exceed 3 months. However, at the end of the 3 months, EIOPA may renew a measure.

Measures adopted by national competent authorities can be permanent.

  • Territorial scope of the measure:

Measures adopted by EIOPA apply across European Union's Member States in the same manner. This means that all market participants providing services in Europe must comply with the measures.

Measures adopted by national competent authorities may apply to market participants established in the jurisdiction of the national competent authority adopting the measure as well as to market participants established in other Member States that carry out business in that jurisdiction.

What are the conditions to be met for the adoption of a measure by EIOPA?

First, EIOPA identifies the issue that raises either:

  • A significant investor protection concern, or
  • A threat to the orderly functioning and integrity of financial markets, or
  • A threat to the stability of the whole or part of the financial system.

Secondly, EIOPA has to demonstrate that:

  • No regulatory requirements under European Union law that are applicable to the financial instrument or activity do not address the threat/concerns mentioned above; and
  • No national competent authority has taken action to address the problem or the actions taken do not adequately address the problem.