On 20 July 2021, the FCA published Consultation Paper 21/23: PRIIPs – Proposed scope rules and amendments to Regulatory Technical Standards (CP21/23).
The proposals in CP21/23 will be of particular interest to consumers, consumer organisations and those firms and individuals that manufacture Packaged Retail and Insurance based Investment Products (PRIIPs) and those who advise on or distribute PRIIPs.
In CP21/23 the FCA is seeking views on proposed targeted amendments to address concerns with the PRIPPs disclosure regime. In summary the FCA proposals would:
- Introduce rules to clarify the scope of the onshored PRIIPs Regulation in relation to corporate bonds, making it clearer that certain common features of these instruments do not make them into PRIIPs.
- Introduce interpretative guidance to clarify what it means for a PRIIP to be ‘made available’ to retail investors.
- Amend Delegated Regulation (EU) 2017/653 which lays down RTS to: (i) replace the requirement and methodologies for presentation of performance scenarios in the key information document (KID) with a requirement for narrative information on performance to be provided, (ii) address the potential for some PRIIPs to be assigned an inappropriately low summary risk indicator in the KID, and (iii) address concerns pertaining certain applications of the slippage methodology when calculating transaction costs.
The deadline for comments on CP21/23 is 30 September 2021.
Subject to the feedback on CP21/23, the FCA plans to make final rules on scope, issue guidance on what it deems ‘made available’, and amend the PRIIPs RTS before the end of 2021. The FCA’s current intention is for the changes to come into effect on 1 January 2022.
The proposals in CP21/23 are the first step that the FCA is taking to improve disclosure in the consumer investment space. HM Treasury has indicated an intention to “conduct a more wholesale review of the disclosure regime for UK retail investors” in their PRIIPs policy statement published on 31 July 2020. The FCA intends to work closely with HM Treasury as part of this review.