UK retail disclosure and the future of PRIIPs in the UK

The government has confirmed that it will repeal the PRIIPs Regulation and will empower the FCA to design a new UK retail disclosure framework. This follows on from a HM Treasury consultation published in December 2022 as part of the Edinburgh Reforms, which looked at both the existing PRIIPs regime and the government’s vision for a retail disclosure regime that is tailored for the UK market. The consultation ran concurrently with an FCA discussion paper on the future disclosure framework.

The government has articulated three general principles for the new UK retail disclosure regime:

• To ensure that retail investors have access to clear and useful information to make evidence-based decisions for their prospective investments
  
  
• To ensure that the disclosure that retail investors receive is proportionate to the risk that they are taking in purchasing an investment product and the complexity of the decision that they are making
  
  
• To provide additional choice for retail investors, and to reduce burdens for firms

However, the detail is still to be designed and further consulted on by the FCA. The FCA will take into account feedback received on the government consultation and from its own discussion paper, which covered the scope of the regime, when and how information should be communicated, the presentation of disclosures and ideas for content (including on costs and charges, risk and performance disclosure).

As consulted, UCITS vehicles will be brought into scope of the new retail disclosure regime, but there will be a transition period from current disclosure requirements (for both packaged products and UCITS) as further detail of the new regime is set out.

The government recognises that the FCA needs new tailored powers to bring about a new retail disclosure framework, particularly to ensure it applies to certain unauthorised firms which are currently subject to obligations under PRIIPs, and to overseas funds, where the FCA should be able to apply disclosure standards to ensure there is a level playing field for UK funds and appropriate information for UK retail consumers. It will publish a draft Statutory Instrument by 2024 to enable the FCA to deliver the new retail disclosure regime.

See here for the government’s webpage on its consultation and here for the FCA’s webpage on its discussion paper.