The Financial Conduct Authority is to set up a new retail disclosure regime, after the Treasury confirmed it will repeal the controversial packaged retail investment and insurance products regime (Priips).
In a consultation response this morning (July 11), the Treasury said the government will publish a draft statutory instrument next year to allow the FCA to create a new retail disclosure regime, which will also include Ucits funds.
Both the Priips and Ucits regulations were introduced by the EU, and on-shored by the UK after Brexit.
Priips is to be revoked under the Edinburgh Reforms.
The Priips regulation has proved controversial, mainly due to the inclusion of performance scenarios in the key investor documents (Kids).
Currently Priips rules require providers to include performance scenarios in their Kids, calculated in line with specific methodologies prescribed in the Priips rules.
They require the use of historical data to calculate the potential returns that an investor may receive under different market conditions.
The Treasury said there was “near universal” support for the revoking of Priips, with respondents to the consultation warning that they had concerns over the misleading nature of some information contained within the Kids.
Some respondents said that as well as reducing consumer choice, the Priips regulation may have contributed to “distortion” within the market for some products, particularly in relation to cost disclosure methodologies, which may have artificially increased the costs of certain products.
The FCA will release a consultation paper asking for industry feedback on their draft rules, following on from the paper released last year.
This includes how much information to include about costs and charges, and level of investment risk.
Chancellor Jeremy Hunt previously described the Priips regulations as “not fit for purpose”.
sally.hickey@ft.com
