The UK FCA is ending EU PRIIPs, introducing consumer compounding and allowing wealthy clients to waive consumer duty as it rewires post-Brexit retail markets.
Summary
- FCA will remove EU PRIIP disclosures from June 2027 and introduce a Consumer Composite Investments framework for funds, trusts and unit-linked policies.
- Around 12.5 million UK adults own products that go to the CCI, with new rules simplifying cost disclosure and tightening the communication between risk and reward.
- Professional customer tests are being overhauled as individuals with £10 million in cash can waive consumer rights, while the quantitative trading test is being scrapped due to concerns about abuse.
Britain’s Financial Conduct Authority has announced reforms aimed at increasing participation in private investment, including the removal of European-era disclosure requirements, updated professional investor classifications and revised risk frameworks, the regulator said on Tuesday.
The UK’s retail investment rules are changing
The reforms are part of one initiative to make shares more accessible to individual investors while maintaining consumer protection, the FCA said.
“This is one of the biggest weeks for UK retail investment in recent memory,” Jonathan Lipkin, director of policy, strategy and innovation at the Investment Association, told Reuters. “It is also, in relation to the EU, a moment when we define more clearly how we move forward in a post-Brexit environment,” he said.
The FCA stated that it will abolish the EU’s disclosure rules under the Packaged Retail and Insurance-Based Investment Products (PRIIPs) Regulation. The regulator will replace this with a Consumer Composite Investments (CCI) framework, which includes mutual funds, investment trusts and unit-linked life insurance, the announcement said.
The FCA estimates that around 12.5 million adults in the UK own products that fall under the CCI framework. The regulator has been consulting on the framework since last year and the final rules simplify cost disclosure and clarify the link between risk and reward, the FCA said. The framework is expected to come into effect in June 2027.
The regulator also outlined revisions to client classifications to distinguish between retail and professional investors. Professional clients will no longer be subject to the FCA’s consumer duty, which imposes higher standards of care, according to the announcement.
The threshold for professional status remains high, but individuals holding at least £10 million ($13.3 million) in cash can now opt out of consumer protection, the FCA said. The regulator is also eliminating the ‘quantitative’ test, which was previously based on criteria such as trading at least ten times per quarter, citing potential for abuse.
