Investment trusts granted safe passage on departures from PRIIPS

Investment trusts that choose to disapply the requirements of PRIIPs will not become the subject of supervisory or enforcement action by the FCA. Since the European Union-inherited regulation known as PRIIPs (Packaged Retail and Insurance-based Investment Products) is due to be replaced in United Kingdom law in H1 2025, the regulator has announced that it will not make investment trusts wait until then before they can disregard the existing, and controversial, PRIIPs framework for the disclosure of costs to investors. Its move took effect on 19 September.

By Neasa MacErlean

The PRIIPS regime, including the "associated technical standards, and/or the requirements of article 50(2)(b) and article 51 of the MiFID Org Regulation", is to be replaced through the "new framework for Consumer Composite Investments (CCIs)", according to a statementfrom the Financial Conduct Authority. And the FCA confirmed that the "Treasury will lay legislation in H2 2024 to provide us with the additional powers to deliver this reform", in a second more specific announcement regarding forbearance for investment trusts. The FCA goes on to explain why early action has been taken for this part of the retail market. "Based on concerns highlighted by industry representatives about the operation of current costs disclosure requirements under assimilated law, and how it is affecting the closed-ended listed investment fund sector, the Government has decided to take more immediate steps."