The New Year brings new resolutions, goals and strides toward self-improvement. In 2018, it also welcomed a new regulation into the financial world.
The Packaged Retail and Insurance-Based Investment Products Regulation, commonly referred to as PRIIPs, took effect Jan. 1, 2018, and aims to make the process of purchasing retail investments more transparent for consumers.
The regulation has already drawn some controversy in the EU, but the law’s rules likely won’t be picked apart until they’re reviewed at the end of the month. However, the regulation should be seen as an opportunity, not an obstacle.
By abiding by the new regulation, companies in the financial industry can gain trust among clients and ensure a more cogent buying process for consumers.
And, just because this is a financial regulation doesn’t mean it won’t affect the translation world: As part of the PRIIPs regulation, companies will need to have Key Information Documents (KIDs) for investment products translated so they’re accessible in the regions they’re being sold.
Here’s a little bit about the regulation and its translation requirements.
PRIIPs In A Nutshell
Before we delve into what companies need to know about translating documents for PRIIPs, let’s take a step back. What is the PRIIPs regulation?
The PRIIPs Regulation was created to make it easier for retail investors – those not qualified as “professional clients” looking to purchase investments – to know what they’re buying. The impetus behind the regulation was due in large part to the financial crisis of 2008.
The regulation reads: “Improving the transparency of PRIIPs offered to retail investors is an important investor protection measure and a precondition for rebuilding the confidence of retail investors in the financial market, in particular in the aftermath of the financial crisis.”
The new rule applies to insurance products, investment funds, structured products, securities and deposits. Non-life insurance products, certain pensions and corporate shares fall out of PRIIP's scope and don’t require oversight under the regulation.
In an attempt to boost consumer confidence and protection, PRIIPs requires that investment manufacturers, or those companies that create and sell the investments being monitored under PRIIPs, prepare Key Information Documents (KIDs) for consumers.
Among other provisions, the KIDs must include the following:
- The type of the PRIIP being purchased
- The PRIIP’s possible costs
- The risks associated with purchasing the PRIIP
- Ways a consumer can make complaints regarding the PRIIP
The regulation states that KIDs should “be clearly expressed and written in language and a style that communicate in a way that facilitates the understanding of the information, in particular, in language that is clear, succinct and comprehensible.”
Ultimately, the regulation’s main goal is to better advise consumers and prevent poor investment choices due to a lack of information.
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What PRIIPs Means For Translation
The KID means more necessary documentation, which in turn, necessitates additional translation. Here’s where Language Solution Partners (LSPs) come in.
The PRIIPs regulation states: “The key information document shall be written in the official languages, or in one of the official languages, used in the part of the Member State where the PRIIP is distributed, or in another language accepted by the competent authorities of that Member State, or where it has been written in a different language, it shall be translated into one of these languages.”
“The translation shall faithfully and accurately reflect the content of the original key information document.”
PRIIPs applies to all investment manufacturers in the EU, including any companies outside of Europe that produce these investments for EU consumers. This means KIDs will need to be translated into at least 23 languages.
Strategies For Improving Quality
Regulations require scrupulous attention to detail. With that said, LSPs and translation buyers alike should consider the following strategies to ensure the accuracy of PRIIPs-related translation projects:
Centralization: Sticking with one LSP and using a centralized project portal lessens the likelihood of errors during the translation process. By employing one translation management system and provider, all documents are secured in a central location and the LSP has a stronger grasp of the client’s specific needs and limitations.
Consolidated TMs: Using a single translation vendor allows companies to work from a consolidated Translation Memory, which helps ensure terminology remains consistent throughout a KID.
Quality Standards: The PRIIPs regulations’ main goal is to provide clear, understandable information to consumers. If KIDs aren’t translated correctly, the regulation isn’t fixing the problem it set out to solve. LSPs should already have strong language quality standards in place, but if they don’t, now is the time to implement them to see that PRIIPs-related materials are easily accessible for consumers.
By centralizing workflows and establishing quality standards, LSPs can help ensure the PRIIPs regulation is successful in providing consumers with a clear understanding of what they’re purchasing.