Treasury revokes PRIIPs and outlines new UK retail disclosure regime

Treasury has published the outcome of its consultation on revoking the PRIIPs Regulation and introducing a more suitable alternative.

The PRIIPs Regulation had been widely criticised due to the misleading information it requires to be provided to investors and the unnecessary burden it places on firms. The consultation response confirms that all firm-facing retail disclosure requirements will be revoked, and FCA will deliver a new retail disclosure regime which is tailored and proportionate to the UK market.

The consultation asked for responses on the Government’s principles for the new 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; and
  • To provide additional choice for retail investors, and to reduce burdens for firms.

While most stakeholders agreed with the proposed principles, some called for greater clarity on how a ‘proportionate’  burden could be defined. There was also strong agreement that FCA should be able to tailor the regime to market specifics in terms of requirements for the format and structure of disclosures. However, a significant proportion of responses argued that FCA should require some standardisation for key information across all products, particularly in relation to the methodologies used to calculate costs and risks.

Recognising the feedback, Treasury promises to ensure that FCA has all the tools necessary to design a new regime, in particular one which carefully considers concerns raised in relation to:

  • products in scope of the new UK disclosure regime;
  • accuracy of disclosure information, and;
  • balances flexibility with comparability to ensure consumers are provided with the appropriate information to make effective investment choices.

Laura Wiles