UK Government extends PRIIPs exemption for UCITS funds for 5 years

Today, the UK Government formally announced that the current exemption for UCITS funds from the local PRIIPs regime will be extended by 5 years until 31 December 2026.

This outcome was long anticipated in the marketplace (following its inclusion within the HM Treasury’s UK-PRIIPS regulatory amendments published in July 2020.

HMT re-confirmed they would now proceed with a formal review of the UK retail disclosure regime.  Similarly declared last year, this will include specific consideration of ‘appropriate performance information’ deemed necessary by the Financial Conduct Authority (FCA)  in due course).

Depending on the review outcome, HMT may either further amend UK-PRIIPs legislation or introduce a successor regulation within the time available.   During the interim, FCA-authorised fund firms can continue producing and filing UCITS Key Investor Information Documents (KIIDs) as before.

HMT declared also that this move “will provide certainty for industry and investors regarding the disclosures UCITS funds providers will have to make to retail investors beyond the end of 2021”.

However, a reminder that the European Fund and Asset Management Association (EFAMA) have issued several warnings (including in discussion with the Financial Times) that UK firms are set to obtain a competitive advantage over their EU rivals as a direct result of the HMT measures adopted.

Moreover, the entire consolidated effort required from EEA UCITS firms in 2022 remains unclear: while continuing to market their funds via the UK temporary permission regime (TPR), they must also face up to the hefty challenge of producing PRIIPS KIDs (including revised fund performance, cost calculations and risk & reward rules) for the same products.

Finally, please bear in mind that this is only the beginning: there is far more (substantial) UK regulatory divergence scheduled to follow next year, including EU sustainable finance disclosures currently excluded from the local statute book.

Keep watching this space for more updates.

Meanwhile, Kneip remain ideally poised to assist all fund firms meet their regulatory needs, given:

• our fully-integrated product catalogue (including dynamic solutions for every challenge mentioned above)
• our perfect positioning (operating in both Luxembourg and London)
• our widespread community, including membership of notable trade bodies (EFAMA, the Investment Association, ALFI, Irish Funds), and many more organisations.

Ready to talk? Get in touch.