Update: On 16 April 2025 the FCA released a second Consultation Paper on the Consumer Composite Investments regime, see our article here: FCA consults on further proposals for Consumer Composite Investments | Simmons & Simmons
On 19 December 2024, the FCA published its much anticipated consultation paper (the CP), “A new product information framework for Consumer Composite Investments” regarding the replacement of the UK PRIIPs regime.
The consultation is open until 20 March 2025 – responses should be submitted using the FCA’s online form here.
The new regime is intended to introduce “a more flexible and proportionate product information framework”, which will apply to any firm that manufactures or distributes a Consumer Composite Investment (CCI) to retail investors in the UK.
The CCI regime will replace PRIIPs KIDs and UCITS KIIDs with a ‘Product Summary’ which must be provided to consumers. The proposals will see a change to the presentation of disclosures, be tech neutral and include standardised rules on the calculation of key metrics.
So, what is a CCI?
Under the proposed rules, the FCA describes it as “an investment where the returns depend on the performance of, or changes in, the value of indirect investments”. The proposals set out in the CP then clarify this rather general definition, so the following products will be included:
- structured deposits
- securities which embed a derivative or include features equivalent to a derivative contract
- debt securities with certain features
- securities issued by a fund, or rights to or interests in such a security
- securities issued by a closed-ended investment fund
- contingent convertible securities
- contracts for difference
- insurance-based investment products.
As a result, the CP will be of interest to (among others) firms which manufacture, advise on or sell PRIIPs, UCITS (both UK and overseas funds), NURS, or non-PRIIP packaged products (other than pensions products). UK-listed closed ended investment funds will be included in the CCI regime, despite their recent exclusion from the UK PRIIPs regime.
Why has the CP been published?
Following Brexit, HMT made clear its commitment to replace the UK’s disclosure regimes for PRIIPs and UCITS with a domestic regime with rules set by the FCA.
Legislation to achieve this was made on 21 November 2024 with the result that products that had previously fallen under the above disclosure regimes (including overseas funds in the Overseas Funds Regime) now fall under the CCI framework.
CCI product information rules will be set out in the FCA Handbook, which is the purpose of the new CP.
The aim is to make significant changes to how product information must be presented by moving away from the rigidly templated PRIIPs KIDs and UCITS KIIDs, which many saw as overly prescriptive, to a more flexible, simpler approach that puts the emphasis on empowering consumers to make effective, timely, and properly informed decisions.
What does the CP contain?
The CP sets out proposals for the information to be disclosed by a CCI and how this can be disclosed.
It covers a wide range of products (as seen above) and also a wide range of topics – including information on costs and charges, risk and reward and past performance.
We will be publishing a fuller summary of the key points coming out of the CP shortly.
What happens next?
The consultation period ends on 20 March 2025.
A further consultation will be published in early 2025 – this will concentrate on draft rules for consequential amendments and transitional provisions.
A policy statement containing the final rules is expected later in 2025.
