On December 5, 2011, the German Financial Supervisory Authority (BaFin) issued a report on the results of its analysis of 120–130 product information sheets. The report provides valuable guidance regarding the necessary and permissible content of the product information sheets.

The Act to Strengthen Investor Protection and to Improve the Operability of the Capital Market (AnsFuG), which came into effect April 8, 2011, has introduced product information sheets (Produktinformationsblätter – PIBs) to Germany.

Designed to protect retail investors from information overload, PIBs are meant to contain a basic description of the financial instrument in a short (two-to three page) and easy to understand manner. Investment advisors are required, pursuant to sec. 31 para 3a of the German Securities Trading Act (WpHG) (the “Regulation”), to provide a PIB to retail investors, with respect to every financial instrument the investment advisors recommend for purchase by such investors. The PIB must set out the essential information regarding the financial instrument, including the type of financial instrument (e.g., securities, derivatives, money market instruments and rights to subscribe for securities), its functionality, the related risks, the chances of repayment of capital under different market conditions and the associated costs. The purpose of the obligation to provide a PIB is to enable the retail investor to more easily compare different financial instruments, and to make an informed decision based on the key facts regarding such financial instrument.