Blog Post

HM Treasury to extend PRIIPs exemption for UCITS funds for five years

3rd June 2021

On June 1 2021, the HM Treasury announced intentions in a press release to extend the current exemption for Undertakings for the Collective Investment in Transferable Securities (UCITS) funds from requirements of the Packaged Retail Investment and Insurance-based Products (PRIIPs) Regulation for a further five years.

The current exemption afforded to UCITS funds expires on  31 December 2021 (although it is expected that a short six month extension is expected to 30 June 2022) meaning that following the proposed legislation, this deadline would be extended to 31 December 2026. The HMT has been afforded the option to extend via a power granted under the Financial Services Act 2021.

At present, the exemption means that funds which fall under the requirements of the UCITS Directive are not required to produce a Key Information Document (KID) but should continue to produce a Key Investor Information document (KIID).

This significant deviation, the first from EU financial services since Brexit, may mean that managers of cross-border funds could, from  1 July 2022, have to produce two separate documents: a UCITS KIID for UK investors and a PRIIPs KID for EU investors.

The UCITS to PRIIPs landscape has remained uncertain but HMT have made this announcement to provide some certainty for both UCITS funds provider and investors regarding disclosures that ought to be made to retail investors. This delay will enable HMT “to consider the most appropriate timing for the transition of UCITS funds into any domestic successor that may result from the planned review of the UK framework for investment product disclosure, and bring forward a Statutory Instrument to amend the exemption date in the PRIIPs Regulation as necessary.”

As part of the planned review of the UK framework review for investment product disclosure, HM Treasury will be reviewing the UK retail disclosure regime and in addition to the extension of the deadline, HM Treasury intends to make the following additional changes to the onshored PRIIPs Regulation:

  1. An amendment enabling the FCA to clarify the scope of the PRIIPs Regulation through their rules; and
  2. An amendment to replace ‘performance scenario’ with ‘appropriate information on performance’ in the PRIIPs Regulation.

Zeidler Group’s legal and regulatory team are actively monitoring the UCITS to PRIIPs KID transition as well as regulatory compliance updates and legal requirements in over 51+ jurisdictions. You will find our multi-disciplined team of experts in Dublin, London, Luxembourg, and Frankfurt.

For additional information on this matter, please contact us.

Author

Gemma Capelo