Asset management firms across Europe need to step up their education and get to grips with the Key Information Document (KID) for UCITS IV, says PricewaterhouseCoopers (PwC) and the European Fund and Asset Management Association (EFAMA).

UCITS IV: Time for change shows that leading firms are ill-prepared for the KID’s impact, and 58 per cent of respondents have not yet considered the cost implications of the necessary changes to their systems and controls.

“The KID has far wider reaching implications than asset managers currently realise,” warned Thierry Blondeau, partner at PwC Luxembourg. “It changes the way in which funds are perceived and will potentially leave some asset managers with gaps in their product ranges.

“For those that have not considered the cost and time implications of these changes, this could result in some nasty surprises come July when the European Commission is expected to adopt implementing measures. Managers must start to adapt their operating systems and fast or they risk being caught out.”

One of the key mandatory changes under UCITS IV is the replacement of the Simplified Prospectus for UCITS with the KID.

“EFAME has supported the KID introduction in UCITS IV to deliver improved investor protection and transparency, as well as cost savings for investment managers,” added Peter de Proft, director general, EFAMA. “Although implementing measures are still to be adopted, we urge the industry to intensify its efforts and resource commitment to be ready on time.”

The effectiveness of the KID has also been questioned in the survey. PwC’s Blondeau said members of the industry are concerned about the KID’s capacity to create a level playing field for European funds under UCITS IV.

“We understand industry concerns due to the lack of key implementing measures at EU and national level,” said De Proft. “However, EFAMA is convinced that the KID will deliver significant improvements over the simplified prospectus and should be the benchmark for investor disclosure documents for competing retail products.”

The KID aims to be a concise and focused presentation of information for prospective investors in UCITS funds, but 60 per cent of respondents are concerned that the level of detail that is required within the KID is not sufficient to enable investors to make sound investment decisions.

Thirty per cent of participants also felt that it was quite or very unlikely that the KID would produce a level playing field, and 22 per cent were undecided.

Half of respondents are also concerned about the possibility of civil liability being applicable to the KID disclosures, despite the UCITS IV Directive text.

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