The Financial Conduct Authority ("FCA") confirmed on 14 July 2022 (https://www.fca.org.uk/brexit/temporary-permissions-regime-tpr/rules-apply-firms-fund-operators#revisions) that UCITS funds marketing in the United Kingdom must continue to provide UK investors with the traditional UCITS Key Investor Information Document ("KIID"). This applies to UCITS registered under the UK's Temporary Marketing Permissions Regime ("TMPR") and UCITS approved to market in the UK under section 272 of the Financial Services and Markets Act 2000 ("FSMA").
As outlined in our recent update (https://maples.com/en/knowledge-centre/2022/6/preparing-for-the-priips-kid-for-ucits),the PRIIPs Regulation (EU) 1286/2014 introduced a mandatory key information document ("PRIIPs KID") for UCITS which are made available to retail investors in the EEA with effect from 1 January 2023.
The European Union (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations 2022 provide that the production of a PRIIPs KID by a UCITS will satisfy the obligation to produce a UCITS KIID, thus avoiding duplication.
However, for those UCITS funds which are marketed in both the UK and EEA, this duplication will in fact be necessary and those UCITS funds will be required to produce both a UCITS KIID (for the UK) and a PRIIPs KID (for the EEA) from 1 January 2023.
There are key differences between the UCITS KIID and the PRIIPs KID particularly in the disclosures relating to performance data and costs and charges. For example, while UCITS KIIDs disclose up to 10 years' past performance, with a risk warning as to its limited value as a guide to future performance, a PRIIPs KID must include forward looking projected returns based on historic performance. Similar to the ''Charges'' section in the UCITS KIID, the PRIIPs KID must include information on costs in the "Composition of Costs" section. However, additional data will be required for the PRIIPs KID including "portfolio transaction costs" not currently factored into the UCITS KIID charges disclosure.
Producing and maintaining both UCITS KIIDs and PRIIPs KIDs will likely result in additional burdens and costs for UCITS managers, particularly around managing the associated distribution of the appropriate KIID or KID to the relevant investor(s).
While the exemption in the UK from the requirement for EEA UCITS to produce a PRIIPs KID lasts until 31 December 2026, the FCA have not provided any guidance on whether the obligation to produce the UCITS KIID will continue once the TMPR expires on 31 December 2025 (and at which stage the UK's Overseas Fund Regime ("OFR") will replace the TMPR).