The Financial Conduct Authority’s (FCA) proposals on its product information framework for consumer composite investments (CCI) are “overly complex and prescriptive”, and represent a “missed opportunity”, trade association PIMFA has stated.

Under the FCA’s proposed regime, a CCI is an investment where the returns are dependent on the performance of the value of indirect investments.

Current rules, introduced when the UK was in the EU, mean that people purchasing investments, such as investment funds, are provided with standardised documents covering prescribed information.

The FCA said these documents were often complex and unclear, and it has therefore set out plans to simplify the information supplied in an effort to boost confidence and drive investment.

However, in response to the consultation, PIMFA said that the FCA’s new disclosure regime remained overly prescriptive and complex for both firms and consumers.

The trade association for wealth management, investment services, and the financial advice and planning industry argued that the regulator’s proposals were incompatible with the FCA’s recent findings on vulnerable consumers and the challenges client face when trying to absorb long documents.

PIMFA raised concerns that the current proposals would not enable consumers to compare products on a like-for-like basis, as distributors would be granted the flexibility to create their own product information documents or amend those created by manufacturers, which it believed would make it difficult for direct comparisons to be made.

The association said it strongly believed that the proposals represented a missed opportunity to take account of industry feedback, and that its members had voiced their frustration that challenges to the current PRIIPs costs and charges disclosure have been “ignored”.

It wanted that this will place a disproportionate focus on cost, arguing that the calculation behind the headline figure remained “complex and opaque”.

In its consultation response, PIMFA called for focus to be given to clarity on the interaction between MiFID and the CCI regime; a proposed timetable for the implementation of the CCI proposals; and a clear roadmap to help firms understand the FCA’s ambition for the wider disclosure framework.

“Our abiding view of the proposals set out by the regulator is one of an opportunity missed,” commented PIMFA senior policy adviser, Julia Sage-Bell.

“When the government confirmed its decision to retire PRIIPS we were excited by the opportunity to reform the overall disclosure framework in line with the FCA’s stated aim to develop a flexible regime that reduced detailed disclosure rules.

“It is disappointing that what has been proposed is a replacement for the existing PRIIPs regime with little to no consideration given to the broader disclosure requirements. The result is a heavily prescribed, lengthy and complex set of rules which seem to run counter to outcomes focused regulation and do not appear to give much consideration to consumer understanding.

“If the FCA decide to progress with these proposals as currently outlined, we would urge them, in particular, to provide clarity to firms on the interaction between MiFID and the CCI regime. We had anticipated that this would have been addressed within the consultation and are concerned that a decision on CCI rules will be taken without full regard to MiFID requirements.

“In addition, we would urge further consideration to be given to the proposed timeline. An effective disclosure regime is the cornerstone of the retail market framework. The industry needs to be given sufficient time to review and discuss the proposed methodologies and presentation once the MiFID component(s) of the consultation is known.”

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