UK Retail Disclosure Reform: New FCA proposals for retail investors

The Financial Conduct Authority (FCA) published their latest developments in their ongoing efforts to enhance Consumer Composite Investments’ (CCIs) framework. Having reported in our blog for some time on the replacement of the UK PRIIPs regime with a new UK-specific CCI regime, the FCA’s second consultation paper – following CP24/30 – now addresses the remaining issues to support regulation.

The consultation is open until May 28, 2025. The feedback collected as part of this consultation will be considered for the FCA to inform their final transitional and timeline provisions. A Policy Statement with final rules is expected in late 2025. It should include revised timelines to ensure that the regime is implemented simultaneously for all firms.

We are pleased to share the latest developments in the FCA’s ongoing efforts to enhance the CCIs framework. The new consultation CP25/9 now addressing remaining issues to support the regime in this second consultation.

Key Proposals in this consultation:

1. Transaction Costs Simplification:

   • Elimination of the obligation for firms to calculate and disclose implicit transaction costs (using the slippage methodology).

   • Focusing on explicit costs such as brokerage, exchange fees, and stamp duty. Explicit transaction costs should be disclosed separately from other ongoing costs and included in the summary cost figure, as outlined in CP24/30.

2. Revised Cost Disclosure Rules:

   • To avoid duplication and ensure consistency, the FCA proposes revisions with the aim to simplify current cost disclosure rules by aligning them with the Markets in Financial Instruments Directive Organisation Regulation (MiFID Org Reg) and their CCIs proposals.

   • They propose rewriting Article 50 and deleting the Handbook version of Article 51. The new Handbook articles will specify that the types of CCI product costs and charges aggregated for MiFID disclosures are the same as those in the CCI product summary.

3. Transitional Provisions:

   • The FCA’s draft transitional provisions allow firms to adopt the new rules during a – currently proposed – 18-month transitional period.

   • UCITS manufacturers are exempt from transitioning from KIID to PRIIPs KID. Distributors must ensure that the manufacturer’s document (KID or product summary) is provided to retail investors in time for consideration before the sale.

   • New CCI manufacturers won’t need to prepare a KID or product summary for the first 12 months. In the following 6 months, they must produce a product summary or the required disclosure document under the old regime.

4. Consequential Amendments to the FCA Handbook:

   • The FCA propose necessary amendments to the FCA Handbook resulting from the replacement of previous regimes with new CCI rules.

   • The draft instrument also revokes certain EU Level 3 PRIIPs guidance:

     • Joint ESA supervisory statement on PRIIPs KID performance scenarios (8 February 2019)

     • PRIIPs flow diagram for risk and reward calculations (16 August 2017)

     • Questions and Answers on PRIIPs KID (20 November 2017)

The FCA will summarize feedback on both consultations in a policy statement. Respondents may revise their responses to CP24/30 based on the new information.

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Our Regulatory Watch follows all developments. As part of our compliance commitment, we are preparing corresponding CCI services.

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