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FCA working group joins calls for review of KIDs

The FCA fund objective working group has joined other industry bodies in calling for a review of the new Key Information Documents issued to investors.

Since 1 January, Priips legislation has meant advisers now have to publish a stand-alone, standardised KID to their clients including performance scenarios, risks, and the total cost of products.

Earlier this week, the Investment Association called for an “urgent” review of the new KID saying it was potentially misleading to clients. The warning was echoed by other industry trade bodies.

In an update on its current works, members of the FCA fund objective working group, chaired by FCA chief economist and director of competition Mary Starks, said Priips’ language “may not improve comparability” of funds, especially in the way it describes how a fund is managed.

A member of the FCA panel, which includes representatives from the IA and groups such as Fidelity International and St. James’s Place Wealth Management, noted that Priips provides “headings” in its documents under a question format which might potentially change how firms think of communicating information to investors.
Elsewhere in its update, the FCA working group has suggested an overhaul of the IA sectors and suggested the “taxonomy” around Mifid II list of target markets could widen further.

The FCA has already given advisers licence to go further than the KID to provide additional explanation if they believe the performance scenarios would mislead clients.

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