The FCA launched a second consultation on the Consumer Composite Investments (CCI) regime on April 16, 2025 (the Second Consultation) with further proposals to support the CCI regime including changes to cost information and rules for the transitional period.

This follows on from an earlier consultation from December 2024. The proposed CCI regime aims to replace the Packaged Retail and Insurance-based Investment Products (PRIIPs) regime and certain Undertakings for Collective Investment in Transferable Securities (UCITS) disclosure requirements.

Highlights

Simplification of calculation and disclosure of transaction costs

The FCA proposes to remove the requirement for firms to calculate and disclose implicit transaction costs. This is linked to a broader effort to simplify and replace the assimilated requirements of the MiFID Organisation Regulation (MiFID Org Reg).

This proposal will significantly reduce the compliance burden on firms. Implicit transaction costs, including slippage (the difference between the price at which a trade is executed and the “arrival price” when the order to trade is transmitted to the market) can be imprecise and difficult to measure accurately. The bid-ask spread (the difference between the buying and selling price) is influenced by market movements and can be largely beyond firms’ control, making it challenging to calculate for current cost disclosure obligations.

The FCA is advocating for a focus on the calculation and disclosure of explicit transaction costs instead. Firms generally have more control over explicit transaction costs, which are simpler to measure and easier for consumers to understand in terms of the cost and return impact of products. Under the proposed CCI regime, explicit transaction costs should be disclosed separately from other ongoing costs and included in the summary cost figure.

Replacement of detailed MiFID cost and charge disclosure requirements

The FCA intends to replace the detailed firm-facing requirements in Articles 50 and 51 of the MiFID Org Reg with the FCA Handbook rules. Article 50 requirements will be rewritten, and the transferred Article 51 will be deleted.

Firms have previously expressed concerns that the cost disclosure requirements of the MiFID Org Reg overlap or contradict those of PRIIPs and UCITS. The FCA proposes to align the current ex-ante and ex-post cost disclosure requirements in the COBS rules derived from the MiFID Org Reg by including a provision in the proposed Article 50 rewrite (COBS 6.1ZA.14BR), specifying that the types of CCI product costs and charges required to be aggregated for MiFID ex-ante and ex-post disclosure are the same as those required to be disclosed in the CCI product summary.

Practical implications

Firms should be mindful of the practical considerations involved in transitioning to the new disclosure requirements and ensure they have robust mechanisms in place to perform cost calculations accurately when the new rules come into effect. In particular, firms with operations in both the UK and the EU should ensure they have distinct sets of calculation models to meet the differing requirements.

In addition, whilst the CCI regime is aimed at retail-facing products, firms should not overlook that the current Article 50 MiFID Org Reg (and future Handbook) detailed costs and charges disclosures also apply to portfolio management and investment advice services provided to professional clients. Therefore, firms should bear in mind those professional-facing disclosures when considering the impact of the rationalisation of the MiFID Org Reg requirements.

Consequential Handbook amendments

Several areas of the FCA Handbook will be impacted by the proposed regime. The FCA proposes to:

• replace references to the PRIIPs, UCITS-KII and NURS-KII regimes and references to the relevant documents required such as KIID;
• signpost in other sourcebooks the provisions and guidance proposed in DISC 1A as outlined in the earlier consultation;
• delete rules and guidance related to the outgoing disclosure regimes which will be replaced by DISC provisions.

The sourcebooks requiring consequential changes include:

• General Provisions (GEN);
• Conduct of Business (COBS);
• Banking Conduct of Business (BCOBS);
• Environmental, Social and Governance (ESG);
• Collective Investment Schemes (COLL);
• Investment Funds (FUND);
• Prospectus Regulation Rules (PRR);
• Glossary.

Transitional provisions

The FCA outlined in the earlier consultation the proposed implementation timeline for firms transitioning to the CCI regime (12-18 months after the Policy Statement and final rules are published, depending on the product) and the optionality for firms during the transition period.

During the transition period, the FCA intends to provide manufacturers with the option to continue providing a KIID for UCITS funds or a KID for products required under the PRIIPs regime. Alternatively, manufacturers can opt to transition to the production of a product summary as set out in the final rules at any time during the applicable transition period.

Certain aspects of the proposed CCI regime will not be implemented during the transition period, as the proposed DISC requirements will not yet apply to distributors. The FCA suggests that distributors should continue to provide relevant documents in a manner consistent with the regime under which they were originally produced throughout the transition period.

Complaints handling

The FCA proposes simplified requirements for unauthorized manufacturers of CCIs (excluding operators of OFR funds as rules in COLL 9 apply to them) since they do not fall within the compulsory jurisdiction of the Financial Ombudsman Service. These requirements include implementing of reasonable and transparent complaints handling procedures, which will be broadly aligned with industry practice and current requirements under the PRIIPs Regulation.

Firms would be required to provide consumers with appropriate information on how to make a complaint, send an acknowledgement of the complaint, investigate and assess the complaint fairly and promptly, send a written response explaining their assessment of the complaint, and comply in good time with any offer of redress once accepted by a complainant.

Next steps

The Second Consultation is open for comments until May 28, 2025. Respondents to the earlier consultation are welcome to change their responses in light of the Second Consultation if they wish to. The FCA will respond to feedback from both consultations together in a single Policy Statement and will engage with stakeholder working groups to resolve the main points of feedback.