On 22 November 2023, HM Treasury (HMT) published a near-final draft Statutory Instrument (SI) and accompanying Policy Note on the UK Retail Disclosure Framework. These documents, published alongside the Chancellor’s Autumn Statement, set out HMT’s planned approach to replacing the EU Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation and creating a new UK retail disclosure framework, as part of its programme to deliver a Smarter Regulatory Framework for financial services that is tailored to the UK.
HMT committed to repealing and replacing the EU-inherited PRIIPs Regulation in December 2022 as part of the Edinburgh Reforms, and issued a consultation on a proposed replacement framework. In July 2023 HMT published its consultation response, confirming its intention to entirely remove from legislation all firm-facing retail disclosure requirements and ensure the FCA can deliver a new UK retail disclosure framework for consumer composite investments which is tailored to the UK.
The Policy Note sets out the policy background for the UK’s new retail disclosure framework for Consumer Composite Investments (CCIs), a summary of the policy intent and how the draft SI will achieve this, stakeholders likely to be impacted and how to comment on the SI.
HMT explains in the Policy Note that the new UK retail disclosure framework for CCIs will be delivered using the Designated Activities Regime (DAR), as introduced by the Financial Services and Markets Act 2023. The Government will create an SI regulating certain common aspects of designated activities (the DAR SI), to consolidate legislation and reduce complexity for firms carrying out more than one designated activity. The Government expects to publish the DAR SI for technical checks early next year and expects it to contain a set of cross-cutting supervision and enforcement provisions that will apply to all designated activities. For this reason, the draft SI does not contain a number of supervision and enforcement provisions.
The near-final draft SI is therefore focused on setting out the scope, key definitions, rule-making powers provided to the FCA by HMT and specific supervision and enforcement provisions (which will not be included in the DAR SI) necessary for the new UK framework for CCIs that are offered to UK retail investors.
Any technical comments on the draft SI should be provided to HMT by 10 January 2024.