FCA changes to the UK PRIIPs disclosure regime

Written by Carly Phillips-Jones

On 25 March 2022, the FCA published a policy statement (PS22/2) setting out amendments to the UK Packaged Retail Investment and Insurance-Based Products (PRIIPs) disclosure regime.

The statement summarises feedback to the FCA’s Consultation Paper 21/23 published in July 2021 which aimed to address the most serious and persistent concerns identified through an earlier Call for Input and ongoing monitoring of the on-shored PRIIPs regulation. It also contains the FCA’s final policy position, Handbook rules and amendments to the Regulatory Technical Standards (RTS).

These changes will directly affect all persons manufacturing, selling, or advising on a PRIIP. This includes but is not limited to: issuers of securities that are or may be classed as PRIIPs (including those that do not require Part 4A authorisations under FSMA); life companies and discretionary investment management firms; firms providing insurance-based investments services; fund managers, wealth managers and financial advisers; stockbrokers and other firms that provide advice to retail clients on funds; issuers of structured products and derivatives; and firms operating retail distribution platforms.

In summary, the FCA changes will:

• Introduce rules to clarify the scope of the PRIIPs Regulation for corporate bonds, making it clearer that certain common features of these instruments do not make them into a PRIIP.
• Introduce interpretative guidance to clarify what it means for a PRIIP to be ‘made available’ to retail investors.
• Amend the PRIIPs RTS to:
  • replace the requirements for presentation of performance scenarios in the key information document (KID) with a requirement for narrative information on performance to be provided instead;
  • address the potential for some PRIIPs to be assigned an inappropriately low summary risk indicator in the KID; and
  • address concerns about certain applications of the ‘slippage’ methodology when calculating transaction costs.
• Make other consequential date changes to the PRIIPs RTS and Handbook rules to align with the extension of the Undertakings for Collective Investment in Transferable Securities (UCITS) exemption contained in the PRIIPs Regulation to 31 December 2026.

The FCA has noted that these are targeted amendments only, part of a wider plan to conduct a more holistic review of the PRIIPs regime and, more generally, the disclosure regime for UK retail investors.

The final rules, which amend the FCA's Conduct of Business sourcebook (COBS) and Collective Investment Schemes sourcebook (COLL), are contained in the Packaged Retail and Insurance-based Investment Products (Scope Rules and Technical Standards) Instrument 2022. The rules come into force on 25 March 2022, with a transition period until 31 December 2022, by which date firms must comply with the new requirements.