Last Updated: April 13, 2020 3:21PM
Financial services is a highly specialized industry, and it has a complex language all of its own. The ever-evolving regulatory environment doesn’t make things any easier—it means that even a simple mistake can have significant consequences.
This is especially the case when it comes to creating and translating financial materials such as Key Information Documents (KIDs) for Packaged Retail and Insurance-based Investment Products (PRIIPs). Make sure you find a partner with the experience and expertise capable of meeting the challenges of this highly technical industry.
What are KIDs for PRIIPs?
Part of the PRIIPs Regulation, which came into effect on 1 January 2018, KIDs are mandatory, three-page A4 documents that product issuers (such as banks or insurers) or distributors (such as financial advisors or other intermediaries) need to give to consumers before purchasing a PRIIP. PRIIPs include investment funds, structured products, unit-linked and with-profits life insurance contracts and structured deposits.
These concise, factual documents set out the key information regarding PRIIPs in a clear, consistent and accessible manner. The aim is to improve transparency and to make it easier for retail investors to compare different investment products from across the E.U.
The documents must follow a very tightly defined structure, with all information presented in a pre-determined sequence of sections. The nature of the investments, risks, costs and potential gains and losses must all be disclosed, using plain language.
Product issuers are responsible for producing the KID, but it is up to distributors to actively provide it to investors before any advice is given or any sale is made.
How Do KIDs Differ From KIIDs?
Key Investor Information Documents (KIIDs) are covered by the 2011 Undertakings for Collective Investment in Transferable Securities (UCITS) Directive. They detail key facts about the way each fund works and its investment risks. Like KIDs, they are designed to assist clients in making an informed investment decision.
A KIID needs to be created for every sub-fund and share class. At two pages long, they should be concise and written in plain language.
Currently, UCITS products are exempt from the requirements of the PRIIPs Regulation, which means that they do not also need a PRIIPs KID. Instead, UCITS managers produce UCITS KIIDs. As of this writing, that exemption is due to end on 31/12/2021 (although that may be pushed back again), which means that the PRIIPs KID will replace the UCITS KIID.
The Challenges of Writing KIDs and KIIDs
Both KIDs and KIIDs must be published in at least one official language of each country in which the product is marketed and must be regularly reviewed and updated. This is a tall order, and creates a huge burden of writing, translation and administration for investment firms.
Translation, in the wrong hands, can go very wrong. The financial services industry is complex, and terminology often differs across regions. With this in mind, the importance of using the right terms in the right context should not be underestimated for any financial document, but KIDs and KIIDS, require special care
Good translators will be not only language experts, but subject matter experts as well. They must be up to speed with current industry trends, terminology and regulations and should be able to write in plain language, whatever country they are writing for. The deep knowledge of specific wording and content requirements makes this a truly niche ability.
What is Plain Language?
Plain language (also called plain writing) is communication that an audience of lay people can understand the first time they read or hear it. The US Plain Writing Act of 2010 defines plain language as “writing that is clear, concise, well-organized and follows other best practices appropriate to the subject or field and intended audience.” Martin Cutts goes further in the Oxford Guide to Plain English: “Plain language is not just about avoiding jargon. It is about the writing and setting out of essential information in a way that gives a cooperative, motivated person a good chance of understanding it at first reading, and in the same sense that the writer meant it to be understood.”
How Can Lionbridge Help?
Lionbridge has over 20 years’ experience offering financial translation services, with specific expertise in the creation, revision and translation of KIDs and KIIDs. We have a whole team of linguistic experts in the fields of investment, retail and private banking, and asset and wealth management. Together, we can deliver a professional, reliable service—and do so on a large scale.
We can support you in the following areas:
- Linguistic: writing, translating and editing KIDs and KIIDs in plain language
- Process: with a content management system or special production software, developed either in-house or by a third-party provider
- Team integration: project management, product management, IT, compliance
- Other services: such as desktop publishing for your KIDs/KIIDs.
Whether you are looking to outsource the whole end-to-end content creation process, or elements of it to a specialist provider, we can write content based on your existing product documentation, edit text to bring it in line with plain language requirements and translate into multiple languages.
Our proprietary software can connect directly to your content management systems for seamless, hassle-free cooperation. By systematically using translation memory software, we can ensure consistency across all of your KIDs and KIIDs and deliver savings over time, given the uniform, repetitive nature of these documents.
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Our business translation services for financial institutions also cover Basel III, FINRA’s SEC Series 16 and IFRS. Contact us to find out more.