The Government and Financial Conduct Authority (FCA) are committed to the
ongoing reform programme to reinvigorate the UK's capital
markets. Ensuring retail investors can make informed investment
decisions is an important part of ensuring healthy capital
markets. As part of this, the Government and FCA are committed to
replacing EU-inherited consumer disclosure regulation with a new
framework tailored to UK markets and firms.
The Treasury consulted on replacing the EU-inherited Packaged
Retail and Insurance-based Investment Products (PRIIPs)
Regulation with a new framework for Consumer Composite
Investments (CCIs). HM Treasury will
lay legislation as soon as possible to provide the FCA with the appropriate
powers to deliver this reform. The new CCI regime will deliver
more tailored and flexible rules which will address concerns
across industry with current disclosure requirements, including
for costs.
The UK's new retail disclosure regime is expected to be in place
in H1 2025, subject to Parliamentary approval and the
FCA consultation
process. The FCA
intends to consult on proposed rules for the CCI regime this autumn.
The UK's new framework for CCIs will support
investors to better understand what they are paying for and the
value they are receiving through the distribution chain. The
FCA's
consultation process will provide an opportunity for a full range
of stakeholders to provide feedback on the new regime, to ensure
it works as intended.
The intent is that the new CCI framework will be
proportionate and will allow more bespoke arrangements to address
concerns that have been raised with the current PRIIPs
framework.
The Government and FCA also welcome the
feedback from the investment trust sector regarding the operation
of current cost disclosure requirements and how they might be
impacting the investment trust sector specifically.
Investment trusts are a well-established type of investment
vehicle in the UK representing over 30% of the FTSE 250 and
investing in over £260 billion in assets in total [1]. They can be a
valuable source of investment funding for both conventional and
emerging asset classes. The valuations and discounts of
investment trusts may be influenced by many factors, independent
of regulation, including investment performance, overall market
sentiment and the interest rate environment.
In response to the feedback from the sector, the Government will
lay legislation to exempt listed investment trusts from the
current PRIIPsRegulation,
as well as make other necessary amendments to other
EU-assimilated law.
This approach is intended as an interim measure, and investment
trusts will be included within the scope of the future UK retail
disclosure framework. The proposed new CCI regime is intended to
better cater for a variety of products and investment vehicles,
including investment trusts, while still ensuring consumers
receive appropriate information to allow them to make meaningful
choices between investment opportunities about composite consumer
investments.
In light of this announcement, the FCA will immediately apply
new forbearance to provide certainty for firms ahead of this
legislation taking effect. Read the
FCA forbearance
statement. From 19 September until the legislation to amend
the PRIIPs
regulation for investment trusts comes into force, the
FCA will not
take supervisory or enforcement action if an investment trust
chooses not to follow the requirements of the PRIIPsregulation
and associated technical standards, and/or the requirements of
Article 50(2)(b) and Article 51 of the MiFID Org Regulation. This
is an interim measure, pending longer term reform.
[1] 92 of the FTSE 250
are Investment Trusts.
