More radical PRIIPS review needed without delay

AIC responds to FCA’s amendments to PRIIPS rules on consumer disclosure.

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The Association of Investment Companies (AIC) has called on the Treasury to make good on its promise to conduct a wholesale review of the current disclosure regime for UK retail investors.

Responding to the FCA’s policy statement ‘PRIIPs – Scope Rules and amendments to Regulatory Technical Standards’ (PS22/2), Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “The substance of the FCA’s amendments to the PRIIPs rules is much as expected, with misleading performance scenarios replaced with a requirement for narrative performance information, and more discretion given to product manufacturers to ‘upgrade’ risk scores when they feel these are too low. These are both concerns the AIC has raised repeatedly and we are pleased to see action taken on them.

“However, the regulator is now at the end of the road. The FCA has done all it can to reform KIDs without being given further powers. Now is the time to get started on the Treasury’s promised wider review of the regime.

“The FCA’s ambitious consumer investment strategy, which seeks to get more people investing, depends on high levels of consumer confidence. That means investors need to receive the best possible information, and this information needs to be consistent and comparable across different investment products. Whilst the FCA has made some welcome steps in this round of changes, meeting this ambition is just not possible under the current PRIIPs framework. 

“We remain concerned about the persistence of the uneven playing field between UCITS funds and investment companies. This has been a problem since Key Information Documents (KIDs) were mandated for PRIIPs in 2018, while UCITS funds continue to produce Key Investor Information Documents (KIIDs) with disclosures that are not comparable.

“Tellingly, the EU expects all funds to report on the same basis by the end of this year, while in the UK, UCITS funds have been told they don’t need to produce a KID until 2026. This means the disparity across investment products will persist, to the potential detriment of investor confidence, and underlines the importance of acting without delay. We need an overhaul of consumer disclosures to make sure they are universally fit for purpose and can support the FCA’s broader consumer investment strategy.”


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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 361 members and the industry has total assets of approximately £265 billion.
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