On 25 March 2022, the FCA published Policy Statement 22/2 ‘PRIIPs – Final scope rules and amendments to Regulatory Technical Standards’ (PS22/2).

In PS22/2 the FCA summarises the feedback received to Consultation Paper 21/23 (CP21/23) and outlines its final policy position, Handbook rules and amendments to the onshored regulatory technical standards (RTS) under the Regulation on Packaged Retail and Insurance-based Investment Products (PRIIPs Regulation).

In summary the FCA is:

  • Introducing rules to clarify the scope of the PRIIPs Regulation for corporate bonds, making it clearer that certain common features of these instruments do not make them into a PRIIP.
  • Introducing interpretative guidance to clarify what it means for a PRIIP to be ‘made available’ to retail investors.
  • Amending the PRIIPs RTS to:
    • replace the requirements and methodologies for presentation of performance scenarios in the key information document (KID) with a requirement for narrative information on performance to be provided;
    • address the potential for some PRIIPs to be assigned an inappropriately low summary risk indicator in the KID; and
    • address concerns about certain applications of the ‘slippage’ methodology when calculating transaction costs.

The FCA is also making consequential date changes to the PRIIPs RTS and Handbook rules to align with the extension of the Undertakings for Collective Investment in Transferable Securities (UCITS) exemption contained in the PRIIPs Regulation (as enacted in retained EU law) to 31 December 2026.

Having considered the feedback to CP21/23 the FCA is introducing a transition period (see below). It has also removed the requirement to update the FCA if a PRIIPs manufacturer upgrades a product’s summary risk indicator score.

The FCA believes the targeted amendments, and future PRIIPs reform, will improve disclosure in the consumer investment space, and will mitigate harm to retail investors. As stated by the FCA in its earlier consultation, these amendments are targeted amendments only. The amendments are the first step towards HM Treasury’s commitment to ‘conduct a more wholesale review of the disclosure regime for UK retail investors,’ which would include a more holistic review of the PRIIPs regime.

The Handbook rules and RTS will come into force on 25 March 2022, with a transition period which will end on 31 December 2022, by which date firms must apply the new requirements.