UK confirms five-year extension for the UCITS exemption under PRIIPs

A press release published on 1 June 2021 by HM Treasury (HMT) has confirmed that the UK will extend the UCITS exemption by five years to 31 December 2026.

Under the exemption, UCITS funds do not have to provide investors with a PRIIPs Key Information Document (KID). They do, though, still need to provide a KIID, as required under the UCITS Directive.

The exemption in the EU is currently due to expire on 31 December 2021, although it is widely expected that a further, final, short extension will be agreed, probably for six months to 30 June 2022. 

HMT's action was based on a provision in the Financial Services Act 2021 which gives it power to extend the current exemption by up to five years if required.

However, during that time, we should find out the results of HMT's review of the UK retail disclosure regime and (as the press release makes clear) this may lead to changes to the UK's on-shored PRIIPs Regulation regime before 2026.  If that happens, HMT confirms that it would 'ensure a smooth transition to the new regime for all retail investment product providers, including those marketing UCITS funds'.

What is being seen as the UK's first significant deviation from EU financial services rules since Brexit may, though, result in those managing cross-border funds having to produce separate disclosure documents from 1 July 2022, one (a UCITS KIID) for UK investors and the other (a PRIIPs KID) for their counterparts in the EU.