On 19 September 2024, HM Treasury (HMT) and the Financial Conduct Authority (FCA) announced their plans to reform UK retail disclosure rules. They also confirmed that they will temporarily exempt investment trusts from assimilated EU law requirements.

Reforming the UK retail disclosure rules

As part of the ongoing reform programme for the UK’s capital markets, HMT and the FCA confirmed that they are committed to replacing EU-inherited consumer cost disclosure regulation with a new framework tailored to UK markets and firms. In particular:

  • Following its consultation on replacing the EU-inherited Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation with a new framework for Consumer Composite Investments (CCIs), HMT plans to lay legislation as soon as possible to provide the FCA with the appropriate powers to deliver this reform. The new CCI regime is intended to deliver more tailored and flexible rules which will address concerns across industry with current disclosure requirements, including for costs. 
  • The new UK retail disclosure regime is expected to be in place by H1 2025 (subject to Parliamentary approval and the FCA consultation process) and the FCA plans to consult on proposed rules for the CCI in autumn 2024. The FCA consultation process will give the opportunity for a full range of stakeholders to provide feedback on the proposed new CCI framework, with the aim of ensuring it works as intended. The CCI framework is intended to be proportionate and to allow more bespoke arrangements to address concerns that have been raised with the current PRIIPs framework.
  • In response to feedback from the investment trust sector on the operation of current cost disclosure requirements and how they might be impacting the investment trust sector specifically, the Government plans to lay legislation to exempt listed investment trusts from the current PRIIPs Regulation, as well as making other necessary amendments to other EU-assimilated law. This approach is intended to be an interim measure, and investment trusts will be included within the scope of the future UK retail disclosure framework.

Forbearance in relation to investment trust disclosure requirements

In light of HMT’s announcement of its plans relating to investment trusts, the FCA will immediately apply new forbearance to provide firms with certainty ahead of the relevant legislation taking effect. With effect from 19 September 2024 and until the legislation to amend the PRIIPs Regulation for investment trusts comes into force, the FCA has announced that it will not take supervisory or enforcement action if an investment trust chooses not to follow the requirements of the PRIIPs Regulation and associated technical standards, and/or the requirements of Article 50(2)(b) and Article 51 of the MiFID Org Regulation (Commission Delegated Regulation (EU) 2017/565). This is an interim measure, pending longer term reform.