Updated: Oct 3, 2021
The FCA has recently published proposals to change Packaged Retail and Insurance-based Investment Products (PRIIPs) regulations.
These regulations cover the distribution of all packaged, publicly marketed financial products that have exposure to underlying assets and which can provide a return over time with some element of risk. They include alternative investment funds (AIFs) and VCTs. The regulations ensure retail investors have a greater understanding about these products, the associated risks and their likely future performance.
Under the current PRIIPs regulation all providers of retail investment products are required to provide a Key Information Document (KID) about the product they are selling. However, as only future fund performing scenarios are included in a KID (with no information relating to past performance of the fund) fund groups and campaigning organisations have long argued that these future performance scenarios are both hard to understand and potentially misleading for retail investors.
In order to better protect investors from poor and / or misleading information, HM Treasury has confirmed that the UK will diverge from existing EU PRIIPs regulation following Brexit.
The regulator is now consulting on the most serious concerns regarding PRIIPs, and subject to the outcome of the consultation amends will be made to the PRIIPs RTS by the end of 2021.
Read the full FCA consultation paper here: https://www.fca.org.uk/publication/consultation/cp21-23.pdf