The standards for the information disclosed to potential investors are included in rules known as the Packaged Retail Investments and Insurance Products (PRIIPs) regime and the Undertaking of Collective Investment in Transferable Securities rules, which were created while the UK was in the EU.
The FCA will now be responsible
for designing and developing new disclosure rules which meet the needs
of the UK market and supports investors to make informed investment
decisions. This would include how much information to include about
costs and charges and level of investment risk.
Sarah Pritchard, Executive
Director of Markets at the FCA said: 'The current rules make it very
difficult for consumers to get the information they need in the way they
need it to help them make effective investment decisions. We now have
the flexibility to design a new regime which is less rigid and more
focused on the outcome we are seeking – we want consumers to have the
confidence to invest and understand the levels of risk involved.
'This discussion paper aims to
seek views from industry and consumers to help us design a disclosure
regime that delivers to support that aim, and we welcome views from
across the market to help us do so.'
The FCA is seeking views on when
and in what format information can be delivered to consumers to ensure
that what is provided is useful and supports the experience of buying a
product. The FCA is also considering who should have responsibility for
producing disclosure.
Presentation is key in order to
get consumers to engage with the information they are provided. The FCA
is interested in how information could be presented to consumers better
including more interactive disclosure and whether to introduce the
practice of layering, where firms to include some information upfront
with more detailed information provided later in the process.
The FCA has already made changes
to the PRIIPs rules post-Brexit in order to address some of the areas of
harm which post the most risk to consumers.
Firms will still be required to follow PRIIPs and UCTIS disclosure requirements until the new regime comes into effect.
The FCA is asking for comments on the Discussion Paper by 7 March 2023.
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