PIMFA outlines six-point plan to reform disclosure requirements in wake of PRIIPs reforms

7 March 2023

PIMFA outlines six-point plan to reform disclosure requirements in wake of PRIIPs reforms

PIMFA, the trade association for wealth management, investment services and the personal investment and financial advice industry, has outlined a six point plan to reform disclosure requirements following the Government’s decision to repeal the Packaged Retail and Insurance-based Investment Products (PRIIPs) regime.

PIMFA has been critical of the PRIIPs regime since it came into effect and has previously welcomed the decision by the Government to replace the regime which the UK inherited from the European Union (EU), with a UK-specific product disclosure regime that will sit within the Financial Conduct Authority (FCA) handbook.

In particular, PIMFA has previously welcomed the Government’s acknowledgement of the negative impact the PRIIPs regime had on the availability of bonds for retail investors. PIMFA has also been pleased to see the Government recognise that efforts to compare the characteristics of a vast range of products through a single document have resulted in Key Information Documents (KID) that might provide misleading information and could potentially lead to consumer harm.  

Looking at the broader disclosure landscape, PIMFA believes the focus of the current review must be on the broader purpose of disclosure and on what disclosure can realistically be expected to achieve. Clients frequently identify the huge amounts of mandatory information they receive as one of the most negative features of their investment experience. Consumer engagement is unlikely to improve unless this can be significantly reduced and simplified.

Consequently, PIMFA is calling on the FCA, in conjunction with the Treasury, to: 

1. reduce the weight placed on disclosure as a regulatory tool, recognising both low levels of consumer engagement and low levels of financial literacy in the adult population
2. reduce the range of assets subject to any post-PRIIPs product regime, by excluding assets such as retail bonds and convertibles, and focussing on mass market products such as funds 
3. take advised business out of the post-PRIIPs product regime, relying instead on the suitability letter to provide consumers with information that is tailored to their needs and circumstances 
4. develop “headline” disclosures that are short and pithy, focussing on “The six things you need to know about this product before buying” 
5. publish a coherent programme for reviewing retail disclosure across-the-board – not just PRIIPs but all rules requiring information to be provided to clients under the Markets in Financial Instruments Directive, Insurance Distribution Directive (IDD), Distance Marketing Directive (DMD) etc.
6. create a central retail disclosure sourcebook in the FCA Handbook, making it easier for firms to identify and comply with the wide range of rules relating to information provision.  

Liz Field, Chief Executive of PIMFA, commented: “PIMFA has for many years opposed the PRIIPs regime, and by and large, our opposition to PRIIPs has been borne out by client experience and firm feedback.

“Like it or not, many clients do not engage with disclosure material, some because they are not able to but many more because they are simply not interested. We have an opportunity to re-think disclosure from first principles – to create simpler and more impactful disclosures for self-directed clients and to consider how information provided to advised clients can work with other regulatory protections to deliver better outcomes.

“As always, we stand ready to work with the Government and the FCA to create a disclosure regime that works for the wide range of ways retail clients engage with financial services.” 

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NOTES TO EDITORS

About PIMFA – the Personal Investment Management & Financial Advice Association

• PIMFA is the trade association for firms that provide wealth management, investment services and the investment and financial advice to everyone from individuals and families to charities, pension funds, trusts and companies.
• The sector currently looks after £1.65 trillion in private savings and investments and employs over 63,000 people.
• More information on PIMFA’s work on the PRIIPs regime and retail discloure can be found on our website and a link to the infographic can be found here.
• PIMFA represents both full and associate member firms. Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families to charities and pension funds, all the way to trusts and companies.  Associate members provide professional services to the PIMFA community.
• PIMFA leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena. Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients, providing responsible stewardship for their long-term savings and investments.
• PIMFA was created in 2017 as the outcome of a merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA) with a history as a trade association since 1991 – read more.
• Further information can be found at pimfa.co.uk

Contact

For further information on this release or other press matters please contact:

Matthew West, PIMFA PR Manager – MatthewW@pimfa.co.uk, +44 (0)20 7382 0376

Sheena Gillett, PIMFA Communications & PR Director – sheenag@pimfa.co.uk, +44 (0)20 7011 9869 / +44 (0)7979 493225