Pimfa has called on the Financial Conduct Authority to review the Priips rules, saying a "more radical approach" to the regime was needed.
Responding to the regulator's 'Priips - Proposed scope rules and amendments to Regulatory Technical Standards' consultation, Pimfa said its members have continually raised concerns that the all-encompassing nature of the key information documents (Kid) "fails to reflect" the way that most consumers approach investment, arguing "the vast bulk of Priip disclosure material is ignored".
It said: "Pimfa believes that following Brexit, it is now the right time for the Treasury and the FCA to commit to a timeframe for a review that considers whether a Priips-style approach to product disclosure - covering everything from the most vanilla of funds to the most complex derivative products - is the right one, or whether information could be provided to investors in more concise and effective ways.
"Pimfa further argues that piecemeal amendments that only tackle the very worst aspects of the regime as they become apparent, do not constitute an approach that is in the best interests of either consumers or the industry."
Launched on July 20, the consultation includes a proposal to scrap the requirement for Priips manufacturers to include performance scenarios in communications with clients, addressing concerns that consumers could be misled under current disclosure rules.
The watchdog is aiming to amend the UK version of the EU regulation by the end of this year, before rules come into effect in January 2022.
The trade body said while some of its concerns had been addressed by the FCA’s proposals in July, the industry was still left to operate a set of requirements that were "largely unworkable" and failed to provide consumers with clear information.
Liz Field, chief executive of Pimfa, said: “We know the FCA does not currently have the ability to institute a root and branch reform of the Priips regime, however necessary this may be, and we welcome the regulators’ recognition of the flaws of the regime, as well as indications of future action to address them.
“But that still leaves our members, and the industry at large, to operate a set of requirements that have failed to provide investors with clear, comprehensible and worthwhile disclosures since their introduction.
“Although many of the amendments proposed in the current consultation are not necessarily objectionable of themselves, they are very clearly 'sticking plasters', aimed at providing short-term relief from the most problematic elements of the regime without addressing its overall lack of cogency and effectiveness. This is why we are calling for a fundamental review of the entire Priips regime as soon as possible.”
The Treasury has previously said amendments to the Financial Services Act thus far targeted only the most pressing concerns and in the longer term it would conduct a more wholesale review of the disclosure regime for UK retail investors.