PIMFA
PACKAGED RETAIL INVESTMENT AND INSURANCE PRODUCTS (PRIIPS)
PRIIPs is a retained EU regulatory regime in the UK that applies to the distribution of Packaged Retail and Insurance-based Investments Products to retail clients. The regime covers a very wide range of investment products, from the most “vanilla” investment funds to the most complex derivatives.
PIMFA members play an important role in distributing PRIIPs to retail clients. Consequently, we want to ensure that the product information that our members are required to provide to their clients is as concise, engaging and useful as possible.
The FCA is consulting on a new Product Information Framework for Consumer Composite Investments. This will replace the PRIIPs regime, however, PRIIPs KIDs will remain a requirement until rules are finalised and the new Product Information Summary documents are launched. Further information can be found here
- WHAT DOES THE PRIIPS REGIME AIM TO DO? THE INTRODUCTION OF PRIIPS IN 2018
Taking effect on 1 January 2018, the EU derived PRIIPs regime aimed to improve the quality of information provided to retail investors purchasing a wide range of financial products including non-UCITS collectives, VCTs, structured products, options, futures, CFDs and certain debt securities.* The Key Information Document presents data on product risks, costs and performance in a standardised format so that potential investors can compare different types of products and come to informed investment decisions.
Product manufacturers are responsible for producing the KID while product distributors – firms that advise on PRIIPs or execute deals in PRIIPs – are required to provide a KID “in good time before” a retail investor is bound by any contract.
However, despite the aim, the PRIIPS regime, and specifically KIDs, have not provided investors with the clear and concise information required and the vast majority of PRIIPs KIDs provided by distributors are not reviewed by retail investors.
- REPEAL OF THE UK RETAINED EU PRIIPs REGULATION
In December 2022, HM Treasury published a consultation which acknowledged that “The PRIIPs Regulation …. is not fit for purpose.” Consequently, the Government has decided that UK PRIIPs legislation will be revoked. It will be replaced by a new product disclosure regime that will sit within the FCA Handbook, enabling the regulator to review and update it as markets evolve.
HM Treasury’s consultation seeks views on how a new product disclosure regime can meet consumer needs without repeating the mistakes of PRIIPs. While making clear that PRIIPs reform is its immediate priority, the paper also recognises that there is a need for a wider review of retail disclosure requirements and sets out the principles that will govern this process.
Alongside the HM Treasury paper, the FCA issued Discussion Paper 22/6 seeking preliminary feedback on how it should approach developing a replacement product regime for PRIIPs and wider reform of retail disclosures. Our “UK Retail Disclosure” material provides further information.
our latest work
20 March 2025
FCA CP24/30 A new product information framework for Consumer Composite Investments
In December the FCA published the long awaited consultation paper CP24/30 which aims to make sure the product information received by consumers is accurate, engaging, and as simple as possible to understand. The new proposals prescribe a suite of core product information which can be formatted and expanded upon by manufacturers and distributors to meet the needs of their target market.
The flexibility is aligned with Consumer Duty from a regulatory perspective but will bring its own challenges for manufacturers and distributors.
Read our response to the CP here
23 September 2024
HMT Announces Reforms to Retail Disclosure Requirements for Investment Trusts
The Government has announced it will lay legislation to exempt closed-ended UK-listed investment funds from the requirements of the current Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation and parts of Articles 50 and 51 of the Markets in Financial Instruments Directive (MiFID) Org Regulation.
This interim exemption (with effect from 19 September 2024) will remain in effect until the start of the new UK retail disclosure framework, subject to Parliamentary approval of the Consumer Composite Investments (CCIs) legislation (new disclosure framework) and the FCA’s consultation process for the CCI regime.
During this period of exemption:
- Investment companies and their Alternative Investment Fund Managers (AIFMs) can choose not to publish a Key Information Document (KID). This means that old versions can be removed from websites.
- Distributors have no obligation to provide a KID to their clients before they purchase an investment company’s shares.
- Client facing firms in the UK will be able to make ‘zero’ cost disclosure to their clients in respect of the company shares they have invested in.
- Client facing firms in the UK will have no costs in relation to investment company shares when making aggregate cost disclosures to clients.
- Company factsheets need not include a cost figure based on the PRIIPs methodology. However, they must continue to meet consumer duty requirements to be fair, clear and not misleading.
- For UK purposes, AIFMs can make a ‘blank’ cost disclosure in the European MiFID Template, which is used to distribute information on costs to the market.
CP24/30 includes investment companies in the definition of Consumer Composite Investments and therefore within the scope of the new product information framework. The proposals provide investment companies with a 12 month period to implement the new rules. The shorter timescale is a reflection of the lack of disclosure currently required. The final rules are due for publication in the summer of 2025.
You can access the statement here, and if you have any queries, please contact Simon Harrington.
