FCA to shake up Priips performance disclosure rules

Another change to the technical standards is addressing the potential for some Priips to be assigned an inappropriately low summary risk indicator, as well as addressing industry concerns around certain applications of the slippage methodology when calculating transaction costs. 

The FCA has confirmed these concerns have led the Treasury to confirm that the UK will “diverge” from EU Priips regulation, “to better protect its consumers”.

After the UK left the EU, it passed the Financial Services Act 2021 which allows the FCA to specify what qualifies as a Priip under the Priips regulation, which came into force in 2018.

In June, the Treasury extended Ucits funds’ exemption from the Priips regulation for five years.

The extension, to December 31, 2026, means that instead of producing the Priips key information document, Ucits funds sold in the UK will continue to be required to provide a key investor information document as per the requirements of the Ucits directive. 

The Treasury said the decision had been made “to provide certainty for industry and investors regarding the disclosures Ucits funds providers will have to make to retail investors beyond the end of 2021.”

This marks a divergence from EU rules, as the European Commission last month ruled that the Ucits exemption for funds marketed in the EU will expire at the end of June next year.

The Treasury has added that changes to the regulation might be enacted sooner than 2026, depending on the outcome of its review of the UK retail disclosure regime.