FCA confirms EEA UCITS need to provide investors with UCITS KIID

On 14 July 2022, the FCA updated its Temporary Permissions Regime webpage to confirm that the exemption (which lasts until 31 December 2026) under which an EEA UCITS does not have to produce a PRIIPs KID applies equally to EEA UCITS which are being marketed in the UK under each of

• s.272 of FSMA and
• the FCA’s Temporary Marketing Permissions Regime (TMPR), which allows registered EEA firms to carry on marketing funds into the UK following Brexit while they await formal recognition.

The upshot?

Where an EEA UCITS fund is distributed to an investor in the UK, it must continue to provide a UCITS KIID. This will continue until the Overseas Funds Regime (OFR) replaces the TMPR and despite the UCITS KIIDs no longer being needed in the EU after 31 December 2022 (when it will be replaced by the EU PRIIPs KID) – see our summary of the rules that will apply in the EU here.

Since there are differences between the required contents of a PRIIPs KID and a UCITS KIID, this means that different disclosures will be needed in the EU and the UK, while systems will need to be in place to ensure that investors receive the correct document.

This increases the risk that some managers may choose to stop marketing existing EEA UCITS in the UK and may decide not to market new EEA UCITS in the UK when these are launched.

The TMPR is due to end on 31 December 2025, although the FCA had previously indicated that it expected the OFR to come into operation for EEA UCITS during 2023.

The new update notes that the FCA is in discussions with HM Treasury on what disclosure requirements would apply to EEA UCITS in the event of an equivalence decision under the OFR but what the requirements will be and when the OFR will come into operation both remain unclear.

See our note on the introduction of the OFR here and our general summary of the regime here.

We will be monitoring how this develops and will report on any future news.