The UK Financial Conduct Authority (FCA) has recently published a consultation paper (CP25/9) setting out further proposals on product information for consumer composite investments (CCIs), i.e., investments where the returns are dependent on the performance of or changes in the value of indirect investments.
Background
On 21 November 2024, the UK government enacted the Consumer Composite Investments (Designated Activities) Regulations 2024. This legislation enables the FCA to replace the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation and the Undertakings for Collective Investment in Transferable Securities (UCITS) disclosure requirements that were introduced across the EU when the UK was a member state, with a new domestic framework (the Framework).
The FCA’s initial proposals for the Framework were set out in an earlier consultation paper, “A new product information framework for Consumer Composite Investments” (CP24/30), published in December 2024, which sought to create a more transparent, engaging and flexible disclosure framework for retail investors.
Following the closure of the consultation period for CP24/30 in March 2025 and in response to stakeholder feedback, the FCA has now published CP25/9, a second consultation paper focusing on consequential and transitional issues necessary to support the effective implementation of the Framework. The Framework will apply to products currently subject to the PRIIPs regime, as well as to UCITS funds, in each case where the investment is made available for distribution to retail investors. This will include overseas funds that benefit from the FCA’s Overseas Funds Regime (OFR), and other recognised schemes.
Key Proposals under CP25/9
The most notable proposals under CP25/9 are as follows:
- Simplification of Transaction Cost Disclosures: The FCA proposes to remove the requirement for firms to calculate and disclose ‘implicit’ transaction costs (such as ‘slippage’ i.e., the difference between the price at which a trade is executed and the arrival price when the order to trade is transmitted to the market), which it views as complex and of limited value to consumers. Instead, firms will only need to disclose ‘explicit’ transaction costs (e.g., broker fees, exchange fees, and stamp duty), which are deemed easier to measure and for consumers to understand and compare.
- Alignment and Rationalisation of Cost Disclosure Rules: CP25/9 proposes to align the cost disclosure requirements in the assimilated Markets in Financial Instruments Directive Organisation Regulation (MiFID Org Reg) with the new CCI rules. The FCA states that this will eliminate duplicative or conflicting requirements.
- Transitional Provisions: The FCA outlines a transition period, allowing firms to continue using existing disclosure documents (such as PRIIPs key information documents (KIDs) or UCITS key investor information documents (KIIDs)) or to adopt the new CCI product summary at any point during the transition. The transition period is designed to give firms sufficient time to adapt to the new regime without undue complexity or disruption.
- Consequential Amendments to the FCA Handbook: The consultation details the necessary changes to various FCA sourcebooks (including the Conduct of Business Sourcebook (COBS), Collective Investment Schemes Sourcebook (COLL), Investment Funds Sourcebook (FUND), and others) to reflect the replacement of the PRIIPs and KIID regimes with the new Framework. This includes updating terminology, cross-references, and removing obsolete provisions.
- Complaints Handling for Unauthorised Firms: Unauthorised manufacturers and distributors of CCIs do not fall within the compulsory jurisdiction of the Financial Ombudsman Service (FOS). As a result, the FCA proposes to apply requirements on unauthorised manufacturers of CCIs (other than operators of OFR funds) to implement ‘reasonable and transparent’ complaints-handling procedures, ensuring that complaints raised by retail investors are dealt with without unreasonable delay and in a competent, diligent, and impartial way.
- Enforcement and Supervision: The FCA confirms that its investigative and enforcement powers under the Financial Services and Markets Act 2000 (FSMA) (as amended by the FSMA (Designated Activities) (Supervision and Enforcement) Regulations 2024) will apply to both authorised and unauthorised persons carrying out CCI activities, designed to ensure robust oversight of the new regime.
Next Steps
The consultation period for CP25/9 closes on 28 May 2025. The FCA intends to publish a combined policy statement responding to feedback on both CP24/30 and CP25/9, with final rules in late 2025. In addition, the FCA anticipates that the new CCI regime will come into force for all firms at the same time, with the transition period and effective dates to be confirmed in a forthcoming policy statement.
CP24/30 and CP25/9 are available here and here, respectively.
