Regulatory Frequently AskedQuestions78

No. The KID is informational only. It helps investors compare products and understand risks and costs but does not replace professional financial advice.

Although the FCA generally discourages cross-referencing, an exception applies for costs and charges. Where relevant, the product summary must include a cross-reference to the parts of the consumer composite investment’s prospectus where more detailed information on costs and charges can be found, including information on performance fees and how they are calculated.

Where the issuer has taken reasonable steps to ensure that communications are addressed exclusively to professional investors, the issuer is not required to produce a Product Summary Document.

Costs and charges must be presented both as a percentage and as a cash amount, rounded to the nearest pound, and shown only where the amount is not zero. The presentation must include one-off entry costs, one-off exit costs, ongoing costs, and, where applicable, the ongoing costs of any investee closed-ended investment funds. Transaction costs must be expressed as a percentage of the assumed investment amount.

Both new and existing products will have the option to follow the outgoing regime or switch to the incoming CCI rules during the transition period.

For a new consumer composite investment, transaction cost estimates must be assessed for reasonableness by comparing them with the transaction costs of consumer composite investments that have a similar structure, investment strategy, and underlying assets.

The product summary must be provided to distributors free of charge and must be made accessible on the manufacturer’s website, alongside a non-machine-readable version. In addition, the manufacturer must publish clear instructions explaining how the machine-readable file should be used.

The ongoing costs of any investee closed-ended investment fund do not need to be aggregated into the ongoing costs figure of the investor fund, but they must still be disclosed separately in the product summary.

Where past performance exists, it must be presented in a line graph assuming reinvestment of any dividends. The graph must show either (i) 10 years of performance ending on a date no earlier than 60 days before the production of the product summary, or (ii) the entire period since the CCI was manufactured, where this is shorter, again ending no earlier than 60 days before the production of the summary. Where no past performance is available, the risk and return section must instead include a narrative explanation of the key drivers of performance.

Costs are calculated in two distinct ways.

First, the reduction in yield is determined; this represents the difference between the gross and net return of the moderate scenario.

Second, when calculating total costs, it’s recommended to use a methodology based on the proportion of the Net Asset Value (NAV). This means that for each annual return under the moderate scenario, every individual cost component is calculated proportionally to the NAV. Entry fees are applied at the start of the investment period, and exit fees at the end.

The manufacturer must review the core information disclosures on a regular basis and at least once every 12 months. The disclosures and the product summary must be revised or updated as necessary to ensure they remain accurate, up to date, and compliant with applicable requirements.

Where material changes are made, the manufacturer must provide each distributor with a reasonable summary of those changes. If no revisions or updates are required following the review, the manufacturer must communicate this fact to the distributors.

The volatility of the consumer composite investment must be calculated and rescaled to an annual basis using the standard volatility formula.