Replacing UK PRIIPs starts with the draft Consumer Composite Investments (Designated Activities) Regulations 2024, which set the legal frame for swapping the UK PRIIPs Regulation, and eventually the UCITS key investor information document (KIID), for a single UK disclosure regime. HM Treasury published this near-final draft in November 2023 with a policy note explaining it, and technical comments closed on 10 January. The law itself says surprisingly little about the document you’ll produce, because the detail is being left to the FCA. This post sets out what we know so far and what is still to come.
Why is the UK moving away from PRIIPs?
The PRIIPs Regulation first applied on 1 January 2018 and stayed on the UK statute book after Brexit. The government’s policy note is direct about the regulation’s problems. It points to formatting rules that are highly prescriptive and burdensome, a key information document (KID) that put comparability ahead of clear and useful information, and compliance costs that reduced consumer choice.
Some fixes have already been made, notably on performance scenarios through the Financial Services Act 2021. The bigger overhaul was set in motion by the Edinburgh Reforms. HM Treasury consulted in December 2022 on deleting PRIIPs and confirmed its approach in July 2023, and the draft regulations are the next step in that process.
What do the draft regulations do?
The draft regulations make five main changes:
- A new name for the products in scope: the draft moves away from the EU concept of a PRIIP and defines the products in scope as Consumer Composite Investments, or CCIs.
- Three designated activities: manufacturing, advising on and offering a CCI to a UK retail investor become designated activities under the regime created by the Financial Services and Markets Act 2023. Firms doing any of these, whether or not they are FCA authorised, will fall within the FCA’s disclosure rules, and the powers reach overseas firms too.
- Rules written by the FCA: the formatting and content of the KID, and the detailed methodologies for cost, risk and performance, are not carried across into the new law and will be replaced by FCA rules.
- Wider civil liability: liability for misleading or inaccurate disclosure will apply to any firm carrying out a designated activity, rather than only to manufacturers.
- UCITS in scope: funds providing a UCITS KIID when the regulations are laid can keep doing so until 31 December 2026, or move across once the FCA’s rules take effect. From 1 January 2027 at the latest, all funds marketed to UK retail investors, including recognised overseas funds, will follow the new FCA rules.
What is the FCA expected to do?
The policy note says the FCA will consult “in due course” on draft rules to replace PRIIPs and certain MiFID cost disclosure provisions, although no date has been set. The FCA has already signalled its thinking in DP22/6, a December 2022 discussion paper asking how retail disclosure should work now that so much investing happens online and without advice.
Cost disclosure is the area to watch, because the government has noted concerns about how the current rules affect investment companies. It intends to repeal the relevant MiFID provisions through a separate instrument so that the FCA can reform cost disclosure as a whole, and the FCA is also considering interim solutions for the investment company sector.
On timing, HM Treasury intends to legislate in 2024, subject to parliamentary time, and the new law will commence at the same time as the FCA’s rules, alongside the repeal of PRIIPs.
What it means in practice
If cost, risk and performance methodologies move into FCA rules, the figures in your UK documents could be calculated differently from the ones you produce today, which touches every system that feeds a KID or KIID.
Today a UK firm may produce PRIIPs KIDs for some products and UCITS KIIDs for others, and the direction of travel is towards a single UK framework. EU investors will continue to receive EU documents, though, so cross-border ranges should expect to run different documents for different markets.
More of the distribution chain is also in scope. Because advising and offering are designated activities alongside manufacturing, distributors and platforms are likely to pay closer attention to the accuracy of the data you send them.
When will UK PRIIPs be replaced?
- 9 December 2022: HM Treasury consults on PRIIPs and UK retail disclosure
- 13 December 2022: the FCA publishes DP22/6 on the future disclosure framework
- July 2023: HM Treasury confirms its approach
- November 2023: the near-final draft regulations and policy note are published
- 10 January 2024: technical comments on the draft close
- 2024: HM Treasury intends to legislate, subject to parliamentary time, with an FCA consultation expected in due course
- 31 December 2026: the last date funds can rely on the UCITS KIID under the draft
- 1 January 2027: the latest date by which all funds follow the new FCA rules
What to do now
- Map your document estate, listing every UK KID and KIID you produce by product and share class, along with the data sources that feed each one.
- Separate the data from the template, because if the layout changes but the underlying cost, risk and performance figures stay governed, the rebuild is far smaller.
- Prepare to respond to the FCA, since its consultation is where the format and methodologies will be decided, by lining up your product, compliance and operations views now.
The draft law sets the frame and leaves the detail to the FCA, so knowing exactly where each number in your KIDs comes from is the most useful preparation you can make while the consultation is awaited.
At Kurtosys we help investment managers keep their fund data governed and consistent, so the same numbers flow into factsheets, regulatory documents like the KID and KIID, client reports and fund websites. When a regime changes the template, that should be one change to the data and design rather than a manual rebuild of every document. If you’d like to talk through what the UK’s move away from PRIIPs could mean for your documents, get in touch.
Sources: HM Treasury: UK retail disclosure framework policy note, draft Consumer Composite Investments (Designated Activities) Regulations 2024, HM Treasury: consultation on PRIIPs and UK retail disclosure, HM Treasury: consultation response, FCA DP22/6: future disclosure framework, as at 1 April 2024.
About this article
This article reflects the position at 1 April 2024 and was checked against the primary sources available at that time. Thomas Bjerkén, our regulatory reporting and fund data specialist, joined Kurtosys after it was published and now looks after our regulatory content. The UK CCI regime has moved on since. For the latest position, see CCI: where the industry is in its implementation journey.
