The Financial Conduct Authority (FCA) has set out plans to simplify the information firms send to investors.
This changes follows Brexit, as previously UK firms sent out information that was standardised across the EU containing prescribed information about investments.
The FCA says that in practice these documents were often complex, unclear and could miss important points. As a result it says this may have put some consumers off investing, or lead them to make less informed decisions..
The FCA is proposing replacing this with a simpler and flexible system, tailored to the UK. Firms will be given more choice about how, what and when they communicate. However, the FCA has also set out some detailed requirements where it is necessary to ensure consistency and comparability across the market to help consumers.
The new rules will essentially apply to all investment fund and insurance-based investment products. The FCA says it hopes this rule change will boost confidence and drive investment into these products.
The new rules supersede the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulations and the Undertakings for Collective Investment in Transferable Securities (UCITS) disclosure requirements.
It says under the new proposals, product information requirements should help consumers understand the products they are buying while giving firms flexibility to innovate.
It is inviting the industry to respond to its proposals with the consultation closing on 20 March 2025.
FCA interim executive director of markets Simon Walls says: “The way people invest has changed. We want to ensure that firms can communicate with their customers in a way that gets them the information they need, when they need it.
“High quality product information will give consumers the confidence to invest; increased participation in this market will not only benefit consumers but will also provide capital to drive the economy and boost growth.”
He adds that proposals set out the FCA’s ambition of building a new, bolder regime and it is open minded about how it can be designed.
The Treasury laid the final Statutory Instrument (SI) to give this effect in November this year. Products formerly under the PRIIPs regime and UCITS disclosure requirements, including funds in the Overseas Funds Regime (OFR), will now fall under the umbrella of CCIs. All CCI product information rules will be in the FCA Handbook. The CCI regime includes products such as closed and open-ended investment funds, structured products, contracts for difference (CfDs), derivatives, and insurance-based investment products (IBIPs).
