UK CCI Law Enacted: PRIIPs transition now begins
This update provides important developments regarding the recent enactment of the UK Consumer Composite Investment (CCI) law. This new regulation marks a significant shift in the regulatory landscape for asset managers distributing funds in the UK.
You can view the official law here.
We outline below the key aspects of the new CCI regime and its implications for your operations.
Key Highlights of the CCI Law
- Enactment and Effective Date
- The UK-CCI statutory instrument was approved by Parliament and entered into force on Friday, 22 November 2024, officially replacing the ‘assimilated’ EU-PRIIPs Regulation, which is now formally revoked.
- It is implied the CCI regime itself will not legally apply until 1 January 2027; meantime, a transition period for asset managers to adjust to the new disclosure rules, once the draft proposals are published and finalised.
- Scope of CCI
- Firms with designated activities pertaining to this new regime include those manufacturing, advising on, offering, or selling CCIs to UK retail investors.
- The legal definition of ‘consumer composite investment’ means:
“an investment or a contract of insurance where the value or amount payable to the investor is subject to fluctuations because of exposure to reference values or to the performance of one or more assets which are not directly purchased by the investor”.
- FCA’s Rule-Making, Supervisory, and Enforcement Powers
- The Financial Conduct Authority (FCA) has acquired rule-making powers under the CCI framework.
- The FCA’s local supervisory and product intervention rules are also restated.
- Temporary Exemptions and Transition Period
- A transition period is retained until 31 December 2026.
- During this time, existing PRIIPs Key Information Documents (KIDs) and UCITS Key Investor Information Documents (KIIDs) will remain valid.
- This applies to UK-UCITS, Non-UCITS Retail Schemes (NURS), and recognized EU-UCITS funds.
- Upcoming FCA Consultation
- The FCA had stated their “intent to consult on proposed rules for the CCI regime this autumn”.
- They have since affirmed they will “soon consult” on the CCI product information framework, which is “expected to be in place in H1 2025”.
Implications for Asset Managers
It is crucial for asset managers to stay informed about these regulatory changes and prepare for the upcoming transition. Here are some steps you can take:
- Review current disclosures: assess your current PRIIPs KIDs and UCITS KIIDs to ensure they meet the interim requirements, ahead of transition to the new CCI framework.
- Engage with the FCA Consultation: participate in the FCA’s consultation process and monitor key updates as the new UK-CCI disclosure framework takes shape.
- Prepare for Compliance: develop a strategy to align with the new CCI regulations ahead of the 2027 deadline. Make sure your revised UK product pre-contractual disclosure documents meet the finalised new standards. Consider the FCA’s stated optionality for firms to choose an early CCI transition, from H2 2025.
- Anticipate further complications: EU firms marketing UCITS products in the UK must remain mindful of the other evolving disclosure challenges ahead, including medium-term impact on key data templates (e.g. EPT, EMT) shared across both marketplaces, alongside the pending EU Retail Investment Strategy (e.g. Digitalised PRIIPs KID).
Conclusion
The enactment of the UK-CCI law represents a significant regulatory change for the asset management industry. Stay well-informed and act proactively to ensure a smooth transition and continued compliance with the new disclosure requirements. Kneip will continue to provide updates and support as more information becomes available.
If you have any questions or need further assistance, please do not hesitate to contact me at [email protected].