The FCA has published a consultation paper detailing how the disclosure rules in the FCA handbook will be amended when the Packaged Retail and Insurance-based Investment Products (PRIIPs) regulation takes effect on 31 December.
Under the new rules, firms will be required to provide a consumer-friendly Key Information Document (KID) for each product, outlining its benefits, risks and costs.
The regulator expects the PRIIPs rules to affect FCA-authorised firms including retail investment product providers, life companies, discretionary investment management firms, insurance-based investments, fund managers, stockbrokers, financial advisers and firms operating retail distribution platforms as well as offshore PRIIPs manufacturers.
In the consultation paper, the FCA says it will not detail the PRIIPs requirements in its handbook but will refer to them. Where the PRIIPs requirements conflict with existing rules, the latter will be amended or removed on 31 December. In the case of certain additional regulation, such as the Markets in Financial Instrument Directive (MiFID), the client’s best interest rule and the fair, clear and not misleading rule, the existing regulation will continue to apply.
While UCITS schemes are categorised as PRIIPs the rules will not apply to them until 31 December 2019, meaning they will need to stick with the Conduct of Business Sourcebook (COBS) and the Collective Investment Schemes Sourcebook (COLL) and the Key Investor Information Document (KIID) requirements.
NURS managers will have the option of producing either a KID or the equivalent of a UCITS KIID, but must opt for one or the other by 31 December.
Firms offering PRIIPs such as with-profits life policies, units in regulated collective investment schemes and investment trust securities held within an investment trust savings scheme will no longer be required to provide a Key Features Document (KFD) or a Key Facts Illustration (KFI).
Feedback on the consultation paper is welcomed until 19 September. The FCA plans to publish a policy statement in November explaining both the new handbook and the final PRIIPs rules.