The draft Packaged Retail and Insurance-based Investment Products (Retail Disclosure) (Amendment) Regulations 2024 have been published, together with an explanatory memorandum. The Regulations make transitional amendments to the onshored Packaged Retail and Insurance-based Investment Products Regulation and Commission Delegated Regulation (EU) 2017/565 (the MiFID Org Regulation), relating to cost disclosure requirements for U.K.-listed closed-ended funds (or "investment trusts"). The single aggregate costs figure currently being supplied to clients is not deemed to give an accurate representation of the actual cost of investment in shares in an investment trust. The draft Regulations therefore exclude investment trusts from the scope of the PRIIPs Regulation, meaning investment trusts (and anyone advising on or selling shares in them) will not be obliged to produce a Key Information Document. The draft Regulations also exclude costs of manufacturing and managing shares in a U.K.-listed investment trust from the aggregated cost disclosure requirements in the MiFID Org Regulation. The Regulations will come into force the day after the day on which they are made.
The U.K. government is proposing to replace the PRIIPs regime with a new retail disclosure framework for so-called "consumer composite investments" (CCI). HMT has published a new draft SI for the proposed CCI regime. However, the impact of the PRIIPs cost disclosure rules for investment trusts emerged in the course of preparing the CCI SI, and it was decided to address these concerns immediately. Investment trusts will continue to be in scope of the CCI regime once it enters into force.
The U.K. Financial Conduct Authority has announced that it will apply forbearance from September 19, 2024, until the Regulations come into force, to provide certainty for investment trusts ahead of the Regulations taking effect.
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