HM Treasury published a policy statement on its proposed approach to bringing forward amendments to the onshore Packaged Retail and Insurance-based Investment Products (PRIIPs) regulation to avoid consumer harm and provide the appropriate certainty to industry once the UK ceases to be bound by the EU regime. The proposed amendments target the most pressing concerns with the PRIIPs regulation and are intended to ensure that UK retail investors are provided with more appropriate PRIIPs disclosures. In the longer term, HM Treasury intends to conduct a more wholesale review of the disclosure regime for UK retail investors. HM Treasury plans to bring forward amendments to the onshore PRIIPs regulation to improve the functioning of the PRIIPs regime in the UK when parliamentary time allows.
The PRIIPs regulation sets the requirements for a standardized disclosure document, known as the Key Information Document (KID), that must be provided to retail investors when they purchase particular packaged investment products, known as PRIIPs. The regulation is supplemented by regulatory technical standards laid down in the EU Commission Delegated Regulation 2017/653 (laying out regulatory technical standards) that sets out further detail on the requirements under PRIIPs. The proposed amendments will enable FCA to make supplementary provisions and amendments to these regulatory technical standards with a view to avoiding consumer harm, addressing distortions of competition, and providing the appropriate certainty to industry. HM Treasury intends to make the following changes to the onshore PRIIPs regulation.
- An amendment enabling FCA to clarify the scope of the PRIIPs regulation through the rules. HM Treasury proposes an amendment, which delegates a power to FCA to clarify the scope of PRIIPs through rules. This would enable FCA to address existing, and potentially future, ambiguities in relation to certain types of investment products. The definition of a PRIIP will remain unchanged.
- An amendment to replace "performance scenario" with "appropriate information on performance" in the PRIIPs Regulation. HM Treasury proposes an amendment to replace the term "performance scenario" with "appropriate information on performance" in the PRIIPs regulation. FCA will then be able to amend the regulatory technical standards to clarify what information on performance should be provided in the KID.
- An amendment enabling HM Treasury to further extend the exemption in place for Undertakings for the Collective Investment in Transferable Securities (UCITS) funds. HM Treasury proposes an amendment that delegates power to the Treasury to further extend the exemption for UCITS for up to a maximum of five years. This will enable HM Treasury to consider the most appropriate timing for transition of UCITS funds into any domestic successor; this may result from the planned review of the UK framework for investment product disclosure and bring forward a Statutory Instrument to amend the exemption date in the PRIIPs regulation, as necessary.
Keywords: Europe, UK, Banking, Securities, Insurance, PRIIPs Regulation, PRIIPs, KID, Disclosures, Regulatory Technical Standards, FCA, HM Treasury
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