The UK Government and the FCA have announced plans to overhaul retail disclosure regulations to enhance transparency and investor confidence.
This initiative aims to replace the EU-inherited Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation with a bespoke framework for Consumer Composite Investments (CCIs).
Scheduled for legislative action as soon as possible, the new framework seeks to empower the FCA with adequate authority to implement these reforms. By addressing concerns raised about the existing PRIIPs framework, the revised rules promise to be more tailored and flexible, significantly impacting how costs and other vital information are disclosed to investors.
The UK’s new retail disclosure regime, expected to be in place by the first half of 2025, is subject to Parliamentary approval and an FCA-led consultation process slated for this autumn. The consultation will gather insights across a spectrum of stakeholders to ensure the CCI framework’s effectiveness and alignment with market needs.
Furthermore, the Government and the FCA have responded to the investment trust sector’s concerns regarding current cost disclosure mandates. Notably, investment trusts, which constitute over 30% of the FTSE 250 and manage upwards of £260bn in assets, will soon enjoy an exemption from the existing PRIIPs regulations until the new framework is fully implemented. This exemption is part of broader efforts to refine financial regulations that better cater to diverse financial instruments and investment vehicles.
In light of these regulatory updates, the FCA has introduced a forbearance measure effective from 19 September. Until the new amendments are enacted, there will be no supervisory or enforcement actions against investment trusts that deviate from the PRIIPs standards. This interim measure underscores the FCA’s commitment to a smooth transition towards a more effective and inclusive regulatory environment.
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