The UK government is set to repeal the European Union's (EU) packaged retail and insurance-based investment products (PRIIPs) regulation as a "matter of priority".
As part of the chancellor's so-called 'Edinburgh Reforms' of UK financial services regulation today (9 December), HM Treasury has said it will now be up to the Financial Conduct Authority (FCA) to deliver a new retail disclosure regime for the UK.
The new disclosure framework will not include the PRIIPs key information document (KID) or any new comparable prescriptive disclosure documents, but will seek to maintain investor protection, support investment choice and reduce burdens for firms.
Under the new UK regime, the FCA will determine the format and presentation requirements for disclosure to remove prescriptive requirements and increase flexibility. The government also wants the regulator to scrap PRIIPs-type comparability and integrate Undertakings for the Collective Investment in Transferable Securities products into the new framework.
The original PRIIPs mandate was introduced in January 2018 in the EU, with the aim of providing greater transparency in the retail market and to standardise disclosure across EU member states.
It was intended to provide retail investors with a single document with which to compare certain products.
However, the government believes the framework is not fit for purpose, and plans to repeal it through the Financial Services and Markets Bill as a "matter of priority".
In a consultation paper published today, the Treasury said that while the EU-inherited PRIIPs regulation sought to help retail investors make sense of a complex investment landscape, that is not what it achieved.
"Instead, it created unnecessarily prescriptive measures that led to information being presented to investors in unhelpful or, worse, misleading ways," it said.
"In addition, the burdensome requirements caused firms to restrict retail investor access to their products, reducing choice and opportunities rather than enhancing them."
The consultation, which closes on 3 March 2023, seeks views from a wide range of stakeholders about what the proposed changes to the UK's retail disclosure framework should look like.
The FCA will consider changes to its rulebook on the basis of the feedback, following the publication of responses.
Association of Investment Companies chief executive Richard Stone said: "We applaud the abolition of PRIIPs and will be arguing for a disclosure regime which helps investors make better investment decisions and puts investment companies and open-ended funds on a level playing field."
DLA Piper financial services regulatory partner Antony Hainsworth said that dropping PRIIPs in favour of a new direction for retail disclosure was "not at the top of most people's Christmas list".
"While the PRIIPs regulation was never universally popular across the industry, KIDs were seen by at least some product manufactures as a neat and compact way for product manufacturers to set out their stall," he said.
