The UK’s Financial Conduct Authority (FCA) has announced plans to overhaul investment product disclosure rules inherited from the EU, addressing longstanding concerns about complexity and inefficiency. The proposed changes aim to replace the current “overly prescriptive” regime with a more streamlined and adaptable framework that prioritizes clarity and relevance for investors.

The reforms will apply to a wide range of financial products, including index tracker funds, closed-end investment funds, and contracts for difference. Simon Walls, FCA executive director of markets, emphasized the need for firms to exercise greater judgment in delivering better outcomes for customers, aligning with the FCA’s consumer duty guidelines.

By moving away from rigid EU disclosure rules such as Priips and Ucits, the FCA aims to make information “accurate, understandable, and broadly comparable.” This shift is expected to benefit 12.6 million UK investors who hold products linked to indirect investments, offering a more practical and consumer-friendly approach to decision-making.

The proposals have been welcomed by many in the financial industry. Jonathan Lipkin of the Investment Association called the changes “an important opportunity to simplify and innovate,” while Jake Green of Ashurst described them as “the biggest shift from EU retail regulation to date.” However, concerns remain in the investment trust sector, where the FCA’s decision to retain reporting requirements for underlying costs is seen as a missed opportunity for more radical reform.

As the UK’s £265 billion investment trust industry grapples with significant challenges, including wide discounts and dwindling funds, sector leaders like Christian Pittard of Abrdn stress the urgency of effective action. “This consultation has much riding on it,” he noted, warning of an existential crisis if issues remain unaddressed.

The FCA has invited feedback on the proposals until March, with final rules expected to be issued next year. The reforms are anticipated to create substantial divergence from EU regulations while enabling UK firms to adopt a more flexible, customer-focused approach.