Introduction  

On 19 December 2024, the UK Financial Conduct Authority (FCA) published its highly anticipated consultation paper titled A new product information framework for Consumer Composite Investments, marking the replacement of the UK PRIIPs regime. This significant development introduces a more flexible and proportionate product information framework applicable to firms manufacturing or distributing consumer composite investments (CCIs) to retail investors in the UK. This provides a unique opportunity to upgrade communication capabilities.

Key differences between PRIIPs and CCI

The CCI regime replaces PRIIPs Key Information Documents (KIDs) and UCITS Key Investor Information Documents (KIIDs) with a ‘Product Summary’ that must be provided to consumers.

The new CCI document allows asset managers more flexibility compared to the rigid PRIIPs KIDs. It presents information in a holistic, investor friendly format, letting asset managers tailor documents to each product. While some metrics are standardized for comparison, they will differ from PRIIPs, and this is how:

• PRIIPs show costs over time with a yield reduction. The CCI consolidates costs into a single percentage over 12 months, with additional breakdowns if necessary.
• CCI risk scale expands to a 1-10 range based on product volatility, assigning riskier products, such as capital-at-risk structured products, CFDs, and derivatives, a minimum score of 9.
• Past performance is illustrated using a 10-year performance graph, provided data is available.

These changes are crucial for companies dealing with various investment products, including ones previously excluded from the PRIIPs regime. This update ensures all relevant entities are included in a domestic framework, facilitating compliance and transparency. However, achieving CCI involves facing some challenges.

Financial and operational restructuring for CCI compliance

Switching to the CCI framework requires both financial and operational adjustments. Financially, firms will have higher costs due to new, detailed disclosure requirements. They need to find a balance between automated and customized disclosures because too much customization increases costs, while too much automation might reduce the disclosures' effectiveness.

Operationally, this shift requires upgrades to existing systems or investments in new ones for customized reporting. Compliance will require more legal and compliance oversight, plus training staff across various departments to properly implement and communication of these new requirements.

Adapting to regulatory changes for competitive edge 

The transition from the PRIIPs regime to the new CCI framework, as outlined by the FCA, challenges asset managers to adapt but also offers a formidable opportunity to gain a competitive edge.

In a market full of regulations and investor scrutiny, proactive adaptation sets asset managers apart. Those who see the CCI shift as an opportunity to improve their content management strategy, rather than just compliance challenge, will succeed. This involves adopting a forward-thinking, data-driven approach instead of merely reacting to document updates.

By using this opportunity to review their current set up of product reporting, firms can streamline their regulatory reporting and improve the agility of their investor communications. This proactive method enables quick responses to changing market conditions and regulatory requirements, ensuring investor information is always accurate, timely, and transparent.

The CCI framework’s flexibility allows asset manages to move away from rigid templates and innovate in presenting to retail investors. By using this flexibility to create clear, engaging, and investor-friendly product summaries, they can build stronger relationships and foster greater trust.

In essence, the CCI transition is not merely about meeting new requirements; it's an opportunity to improve operational efficiency, strengthen investor trust, and gain a competitive edge in a dynamic and demanding market. By proactively adapting, asset managers can turn regulatory changes into a strategic advantage.

Embracing the CCI Framework

The shift from PRIIPs to the CCI framework is not just a  regulatory update; it is significant change for asset managers. It requires careful compliance and a complete overhaul of content management practices.

The new regime allows for better investor communication, but it requires a proactive, data-driven approach to managing and sharing content .

To fully benefit from the CCI framework, it’s important to understand the value if detailed, well-organized content. Asset managers can move beyond  traditional document-centric approaches by preparing in advance and structuring content in a modular, data-rich format. This enables quick adjustments of reports to comply with evolving regulatory demands, and improves investor communication.

Moreover, the CCI framework's emphasis on flexibility encourages innovation in report design. Firms should seize this opportunity to move beyond standardized templates and explore new ways to present complex financial information.

In conclusion, transitioning to the CCI framework is a catalyst for change. By adopting a proactive, data-driven approach to content management, asset managers can handle regulatory changes, improves investor engagement, and secure a competitive advantage. Investing in adaptable content will lead better business outcomes and foster greater trust in the financial services industry.