Article 3 What are the risks and what could I get in return? section

In the section entitled "What are the risks and what could I get in return?" of the key information document, PRIIP manufacturers shall apply the methodology for the presentation of risk as set out in Annex II, include the technical aspects for the presentation of the summary risk indicator as set out in Annex III and comply with the technical guidance, the formats and the methodology for the presentation of performance scenarios, as set out in Annexes IV and V.

In the section entitled "What are the risks and what could I get in return?" of the key information document, PRIIP manufacturers shall include the following:

1. (a)

   the level of risk of the PRIIP in the form of a risk class by using a summary risk indicator having a numerical scale from 1 to 7;

2. (b)

   an explicit reference to any illiquid PRIIP or PRIIP with materially relevant liquidity risk, as defined in Part 4 of Annex II, in the form of a warning to this effect in the presentation of the summary risk indicator;

3. (c)

   a narrative below the summary risk indicator explaining that if a PRIIP is denominated in a currency other than pounds sterling, the return, when expressed in pounds sterling, may change depending on currency fluctuations;

4. (d)

   a brief description of the PRIIP's risk and reward profile and a warning to the effect that the risk of the PRIIP may be significantly higher than the one represented in the summary risk indicator where the PRIIP is not held to maturity or for the recommended holding period, where appropriate;

5. (e)

   for PRIIPs with contractually agreed-upon early exit penalties or long disinvestment notice periods, a reference to the relevant underlying conditions in the section "How long should I hold it and can I take money out early?";

6. (f)

   an indication of the possible maximum loss, and information that the investment may be lost if it is not protected or where the PRIIP manufacturer is unable to pay out, or that necessary additional investment payments to the initial investment may be required and that the total loss may significantly exceed the total initial investment.

PRIIP manufacturers shall include four appropriate performance scenarios, as set out in Annex V in the section entitled "What are the risks and what could I get in return?" of the key information document. Those four performance scenarios shall represent a stress scenario, an unfavourable scenario, a moderate scenario and a favourable scenario.

For insurance-based investment products, an additional performance scenario shall be included in the section entitled "What are the risks and what could I get in return?" of the key information document reflecting the insurance benefit the beneficiary receives where a covered insured event occurs.

For PRIIPs that are futures, call options and put options traded on a regulated market or on a third-country market considered to be equivalent to a regulated market in accordance with Article 28 of Regulation (EU) No 600/2014 of the European Parliament and of the Council, performance scenarios shall be included in the form of pay-off structure graphs as set out in Annex V in the section entitled "What are the risks and what could I get in return?" of the key information document.