AIC says FCA’s PRIIPs performance proposals are “a step in the right direction” but other changes are “underwhelming”

AIC responds to the FCA’s Consultation Paper on PRIIPs.

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The Association of Investment Companies (AIC) has responded to the Financial Conduct Authority (FCA) Consultation Paper CP21/23 PRIIPs - Proposed scope rules and amendments to Regulatory Technical Standards.

Ian Sayers, Chief Executive of the Association of Investment Companies (AIC), said: “We welcome the FCA’s proposals to abolish the current misleading performance scenarios in KIDs (Key Information Documents). This is a step in the right direction for investors. However, other proposed changes are underwhelming and tinker around the edges rather than addressing the fundamental problems that cause KIDs to misinform investors.

“For example, the FCA has recognised that the Summary Risk Indicator (SRI), based on volatility measures, can be misleading for products like Venture Capital Trusts (VCTs). They are proposing that PRIIPs providers will need to upgrade risk ratings if they consider they are too low and the SRI for VCTs should be no lower than 6. Surely this demonstrates that the SRI methodology does not work properly and needs a complete rethink.

“We were raising concerns about KIDs even before the rules were finalised and we have been calling for changes since their introduction on 1 January 2018. Investment companies are still at a disadvantage in having to produce these toxic disclosures, whilst UCITS funds have repeatedly been let off the hook. It’s high time the Treasury conducted a comprehensive review of KIDs rather than relying on a piecemeal approach to their reform.”

-ENDS-

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Notes to editors

  1. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment. Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 362 members and the industry has total assets of approximately £257 billion.
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