Second FCA Consultation Paper on Consumer Composite Investments (CCIs): Cutting through the noise in investment disclosures

Introduction

Just as the dust was settling on the FCA's last CCI consultation paper, the regulator is already back with a new consultation. The results of the December consultation are still being analysed by the FCA.

The message of this 124-page long document is clear: the FCA wants to simplify, streamline, and lighten the regulatory load for firms. But while the goal is obvious, the path to get there feels a little less smooth.

In this latest paper, the FCA sets its sight on a few key areas: cutting back regulatory overlap, aligning cost calculations, easing complaints handling for unauthorised firms, and updating the rulebook to reflect the shift to the new CCI regime. In this blog we'll highlight a couple of these.

Transaction costs

A key proposal is the simplification of transaction cost disclosures. Under the current PRIIPs approach (and also as per the December CCI Consultation), firms are required to disclose both explicit and implicit transaction costs. Implicit costs, typically calculated using slippage methodology (the difference between trade execution and arrival prices), have been criticized for their complexity and limited reliability.

In response, the FCA proposes to remove the requirement to calculate and disclose implicit transaction costs. The regulator argues that these costs are often influenced by market volatility and are outside firms' direct control, thus offering limited value to consumers.

Instead, firms will be required to disclose only explicit transaction costs - such as broker fees, exchange fees, and taxes - which are more transparent, easier to calculate, and under the firm's influence. These explicit costs will need to be presented separately and included in the overall cost summary provided to investors. The FCA proposes to keep the rule that transaction costs should be averaged over 36 months if the CCI has been active that long, or reasonably estimated if it has been active for less.

Streamlining

The FCA has also identified overlaps and inconsistencies between the MIFID Organisation Regulation, PRIIPs and the UCITS disclosure requirements. To address this, the consultation proposes a harmonisation of cost disclosures methodologies across these regimes.

For CCIs, cost disclosures under the MIFID rules will be aligned with those required under the new CCI product summary. This change is designed to ensure that firms operating under multiple frameworks will not face duplicative or conflicting disclosure obligations.

Updating related regulations

To support the transition to the CCI regime, the FCA is proposing a series of targeted amendments of the FCA Handbook that result from the replacement of the previous regimes with new CCI rules. This includes:

• Replacing references to the PRIIP KID and UCITS KIID with the new CCI product summary
• Including transitional provisions to allow flexibility for firms during the investment period. As mentioned in our previous blog (and repeated in this consultation): firms will have the option to begin transitioning to the new regime as soon as the firm is ready. However, existing PRIIP KIDs, UCITS KIIDs, or equivalent disclosures produced in accordance with current requirements will remain compliant during the proposed 18 months transition period.
• Removing obsolete requirements linked to the previous disclosure regimes.

The objective is to ensure coherence and clarity across the FCA rulebook as the PRIIPs and UCITS KIID frameworks are phased out for retail investment products in the UK.

Conclusion

The FCA’s latest consultation represents a significant step toward a more streamlined and proportionate disclosure regime for Consumer Composite Investments. By removing complexity, aligning disclosure standards, and ensuring proportionate oversight of unauthorised manufacturers, the proposed changes seek to improve both industry compliance and consumer outcomes.

Firms operating in the retail investment space should review these proposals carefully and consider their implications ahead of the final policy statement, expected later this year