The European Union has indicated it will delay the requirement for open-ended funds to produce key information documents (Kids).
Investment trusts are already required to supply Kids, which summarise key information about a product in a standard format to make it easier for investors to compare them.
The rules were due to be extended to open-ended funds from 2020 but the documents have become mired in controversy.
But FTAdviser's sister publication Ignites Europe reported the EU Commission was likely to accept the recommendations of a cross-party group of MEPs that the implementation of the rules should be delayed.
The Association of Investment Companies (AIC), a trade body representing investment trusts, have been lobbying regulators to change the Kid rules for some time.
A representative of the trade body said if the rules are to be delayed for open-ended funds, then they should be suspended for investment trusts.
Ian Sayers, chief executive of the AIC said: "The proposed delay lets the cat out of the bag. Though no doubt it will be dressed up rather differently, the real motivation for a delay is that Kids are so toxic for retail investors that regulators fear it will damage the UCITS brand itself.
"As the flagship of European funds regulation, this is understandable but where does that leave investors in other funds? They have been misled by Kids for nearly a year now. Don’t they deserve the same protection?
"Recent proposals for reform will not resolve these fundamental problems. The Kid should be suspended for all products to allow time to fix the problems once and for all. If Kids are not good enough for UCITS investors, then they are not good enough for purchasers of investment companies."
Aspects of the Kid requirements, particularly the risk measures and performance indicators, have attracted the ire of the investment industry, with Judith MacKenzie, a fund manager at Downing, said around around £3m was pulled out of her fund by advisers and wealth managers after the charges calculation showed the fund was costing investors five times more than was actually the case.
The board of the City of London Investment Trust urged investors to ignore the performance metrics it was required to put into its promotional material because it feared the methods used for calculating the future performance projections were unreliable.
Andrew Bailey, chief executive of the Financial Conduct Authority, previously said the Kid requirements were a concern for him.
Francis Klonowksi, an adviser at Klonowski and Co in Leeds, said he would never make an investment decision on behalf of a client based on what was in the Kid.
david.thorpe@ft.com
