Following changes to the FCA’s Conduct of Business sourcebook (COBS), firms will have the option, but not the obligation, to continue to provide projections to retail investors outside of the Packaged Retail and Insurance-based Investment Products (PRIIPs) standardised key information document (KID), providing they are produced in line with COBS rules.

COBS 13.5 Preparing product information: other projections sets out how a firm must prepare such a projection; the main changes being in COBS 13.5.2R and COBS 13.5.2BG.

If firms choose to provide a projection alongside the PRIIPs KID, then, to avoid consumer confusion, they will need to explain all differences between ‘performance scenarios’ in the KID and any projection provided, in line with the ‘fair, clear and not misleading rule’.

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EU Regulation No 1286/2014 (the “PRIIPs Regulation”) requires those manufacturing a packaged retail and insurance-based investment product (“PRIIP”) to draw up a key information document (“KID”) containing standard information, and requires persons advising on or selling PRIIPs to provide the KID to retail investors, with effect from 1 January 2018.

The UK PRIIPs Regulations (Statutory Instrument 2017 No.1127: The Packaged Retail and Insurance-based Investment Products Regulations 2017) have been laid before Parliament and similarly come into force on 1 January 2018.  They designate the FCA as the competent authority in the UK for the purposes of the PRIIPs Regulation and give the FCA certain enforcement powers.

Where a person has infringed the requirements of the PRIIPs Regulation, these enforcement powers include the power to:

• prohibit or suspend the marketing of a PRIIP,
• prohibit the provision of a KID, or
• require the publication of a new version of a KID.

The FCA also now has the power to impose penalties and make a statement (such as a ‘supervisory notice’, ‘warning notice’ or a ‘decision notice’) in relation to a contravention of the PRIIP Regulation.

Where any of these have been actioned, the FCA may—

1. issue a direct communication to the retail investor concerned, giving the investor information about the sanction, and informing the investor where to lodge complaints or submit claims for redress; or
2. require the PRIIP manufacturer or person advising on, or selling, the PRIIP to issue such a communication to any retail investors concerned specified by the FCA or to retail investors of a description specified by the FCA.

The UK PRIIPs Regulations make the following important additions:

• The Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemption) Order 2001 (S.I. 2001/1060) – addition of new article 31 stating that the ‘scheme promotion restriction‘ does not apply to any communication required by Article 13 of the PRIIPs Regulation.
• The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (S.I. 2005/1529) – addition of new article 20C stating that the financial promotion restriction does not apply to any communication required by Article 13 of the PRIIPs Regulation.

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