FCA publishes discussion paper on its “Future Disclosure Framework” for retail investments

On 13th December the FCA FCA published a discussion paper (DP22/6) on its "Future Disclosure Framework".  

Background

The premise of the paper is that the current regime was designed for advised sales and paper based disclosure, and that the way retail investments are distributed has changed.  By way of example, the FCA's 2017 Asset Management Market Study found that under 3% of retail investors read regulated pre-contractual fund disclosure documents. A review of retail disclosure is therefore necessary to help retail financial services be fit for the future, given the important role disclosure plays in allowing consumers to make informed decisions and therefore supporting competition and market integrity. 

The paper also builds upon the Government's Edinburgh Reforms, including the plan to scrap the PRIIPs regulation and to remove the UCITS disclosure requirements in favour of future requirements to sit solely within the FCA handbook, as well as the forthcoming Consumer Duty. 

The FCA is inviting discussion on how to address the issues of the past and prepare retail disclosure for the future.

What the FCA is seeking views on

The discussion paper invites feedback on how the FCA can design and deliver a good disclosure regime which is supportive, engaging, accessible and flexible. The aim is to safeguard investor protection whilst increasing choice and reducing unnecessary or over prescriptive constraints on firms. The FCA is inviting views in three areas as follows:

• the delivery of retail disclosure;
• the presentation of retail disclosure; and 
• the content of retail disclosure.

It is also seeking input on how it can future-proof retail disclosure regulation so that a replacement regime does not constrain innovation in the market.

Next steps

Comments are invited by 7 March 2023.  No timeline is currently set for the feedback statement. 

The distribution of retail investments has changed in recent years, with a growing trend towards online investment and the digital distribution of disclosure. However, most disclosure regulations were designed for advised sales and paper-based disclosure and a review of retail disclosure is now needed to help financial services be fit for the future.

https://www.fca.org.uk/publications/discussion-papers/dp22-6-future-disclosure-framework