The CCI Regime is a new disclosure regime which will apply to manufacturers and distributors of investments classified as Composite Consumer Investments (CCI) sold to UK retail investors. The regime is deliberately broad and applies to both FCA and PRA authorised firms as well as unregulated firms in relation to their CCI activities.

The Government has already implemented legislation to revoke PRIIPs Key Investor Information Document (KID) and UCITS Key Investor Information Document (KIID) requirements. The Consumer Composite Investments (Designated Activities) Regulations 2024 (CCI Regulations) which were implemented in November 2024 empower the FCA to deliver this new CCI regime. The FCA plans to implement the regime by introducing rules in new chapters of the Product Disclosure Sourcebook (known as DISC).

Despite moving away from the rigid and templated format of PRIIPs KIDs and the UCITS KIID, the CCI regime does in fact comprise a hybrid approach. Firms will still have to comply with specific content requirements, alongside their broader obligations under the Consumer Duty. The regulatory rationale for this is to provide targeted rules to facilitate standardisation and comparability whilst also allowing firms flexibility to innovate and meet their customers’ needs under the Consumer Duty. 

A CCI is an investment “where the returns are dependent on the performance of or changes in the value of indirect investments”. The FCA has indicated that this will cover all products in scope of the current PRIIPs and UCITS regimes and has specified a non-exhaustive list of products which fall within the scope of this definition including, for example, units, shares or interests in open-ended funds, closed-ended funds, closed-ended investment companies such as investment trusts and venture capital trusts, structured products and structured deposits, contracts for difference, and insurance-based investments products.

The FCA has proposed that certain products will be specifically excluded from the regime (to the extent that they would otherwise meet the definition of a CCI) and goes slightly further than the CCI Regulations in prescribing these. These include (amongst others) pension schemes, funeral plan products deposits that are not structured deposits, pure protection contracts and long-term insurance contracts where benefits are only payable on death and sickness.

Given the breadth of the definition, firms will need to carefully review the exclusions to consider whether their products are CCIs.

The FCA has also proposed that the CCI regime will not apply to an offer of a CCI where the offer meets the following criteria: 

• the marketing materials feature clear and prominent disclosures that the product is not intended for retail investors, and the CCI is only being offered to professional clients and/or eligible counterparties;
• the issuer has taken reasonable steps to ensure the offer and associated promotional communications are directed only at non-retail investors; and
• a minimum investment of £50,000 applies for each end-investor. 

This to prevent the regime from capturing products which were never intended to be sold to retail customers but are made available on the secondary market.

There are three fundamental changes which underpin the new regime: 

• the new product disclosure document known as a “Product Summary” (please see question four below for further information); 
• the increased responsibility placed on firms to determine and meet their customers’ information needs; and 
• the sharing of responsibilities across the distribution chain. The regime imposes specific obligations on both manufacturers and distributors as well as requiring them to collaborate and engage with each other. 

Manufacturers must provide to distributors both: 

• a Product Summary (which can be provided to underlying retail customers); and
• underlying Core Information (which is not intended to be provided to customers but instead used by distributors to develop customer communications), (together the Manufacturer Information). 

The Manufacturer Information must be provided to distributors in a machine readable format and in good time before the CCI can be distributed. The FCA expects manufacturers to meet this information requirement by publishing the Manufacturer Information on their website. Manufacturers will need to review the Manufacturer Information as necessary and at least annually (flagging any material changes to distributors). They will also need to respond to any feedback from distributors. 

Distributors must provide customers with a Product Summary both before a sale of the CCI and after a sale is made. Distributors can either use the manufacturer’s Product Summary without amendment or use the Manufacturer Information to provide their own Product Summary based on the distributor’s understanding of its customers’ information needs. In the latter circumstance, the distributor will still benefit from the Manufacturer Information to aid its understanding of the product and to produce any supplemental product information. 

Where a distributor considers that the substance of the Manufacturer Information needs to be modified to avoid misleading customers, it must discuss its concerns with the manufacturer and only proceed with the modifications with the written agreement of the manufacturer. 

Distributors may also decide that additional information needs to be provided alongside the Product Summary to meet their Consumer Duty obligations. Whichever approach is taken, Distributors will need to provide evidence that they are delivering good consumer outcomes. Manufacturers will also need to consider any risks of harm from different distributors providing alternative Product Summaries to investors. 

To ensure that firms work together across the distribution regime, the FCA is proposing a requirement for firms to cooperate and share information. The FCA has stated in particular that it expects firms to work together to meet retail investors’ information needs and remain alive to potential issues with product information, whether or not they provided it.  

Instead of a PRIIPs KID or UCITS KIID, retail customers must be provided with a Product Summary. Whilst many of the headline requirements for the Product Summary will be familiar, there are a number of differences in the new prescriptive requirements.

The Product Summary must satisfy requirements relating to: (i) content; (ii) prominence; and (iii) Consumer Duty aligned standards. Unlike the KIID or KID however, the design and layout is not prescribed. 

The content must include: 

• a short description of the product’s characteristics including its investment objectives and investment policy;
• risk information presented on a horizontal linear scale of one to 10 (please see questions eight and nine for further information on the risk information requirements); 
• past performance information (please see question 10 for further information on the risk information requirements);
• costs and charges information. The Product Summary should contain statements emphasising the importance of costs and charges, with a clear explanation of the impact of costs and charges an investor pays on the potential growth of the CCI and which costs are estimated (please see question seven below for further information regarding costs and charges disclosures);
• identifying information about the product (i.e. the CCI name, any ISIN or unique product identifier, a fund’s authorisation status);
• information on who prepared the Product Summary and the date it was issued; 
• information on holding or exiting the product; and
• information on how to complain and eligibility for cover from the Financial Ombudsman Service (FOS) and Financial Services Compensation Scheme (FSCS). 

Information about costs and risks and warnings regarding past performance must be made prominent in the Product Summary.

The Consumer Duty aligned standards are intended to ensure that investors are presented with information in a way that enables them to make timely and effective decisions. Firms are required to take reasonable steps to ensure that the Product Summary meets the information needs of retail investors and is likely to be understood by them. It should not for example include excessive cross references to other materials. These standards are particularly relevant for unauthorised firms which are not otherwise subject to the Consumer Duty. 

Please see questions seven to 10 below for further detail on the more detailed requirements in respect of costs and charges, risk and performance disclosures.

The FCA has been granted powers under the Designated Activities Regime (DAR) set out in Part 5A of the Financial Services and Markets Act 2000 to apply the CCI regime to unauthorised firms. The FCA has confirmed it plans to exercise these powers to ensure that all persons or entities who manufacture or distribute CCIs will be subject to the final regime and FCA requirements, regardless of whether or not they are FCA or PRA authorised. The FCA has therefore drafted the new rules in the DISC sourcebook to apply to both FCA and PRA authorised firms as well as unregulated firms. This means that the CCI regime will apply to both overseas funds recognised under section 272A FSMA (Recognised Funds) as well as other EEA firms including AIFMs and MiFID firms selling in scope products to UK retail investors. 

As a result of its powers under DAR, the FCA will also be able to take enforcement action against unauthorised firms. In particular, it will be able to exercise powers of restitution to require unauthorised firms which breach the CCI regime to pay restitution to compensate investors which have suffered loss due to a breach of the CCI requirements. Investors will also have a private right of action against unauthorised firms (and authorised firms) for any loss as result of those firms breaching their obligations under the CCI regime. 

In order to ensure consistent consumer protection the FCA has also proposed applying high level Consumer Duty aligned standards to unauthorised firms carrying on CCI activities including: product governance requirements and rules equivalent to its Principles for Businesses 1, 2, 3, 10 and 11. 

Although, the FCA has stated that it does not intend to apply the fair value requirement to the managers of Recognised Funds, under the current proposals, Recognised Funds will be subject to the other requirements applicable to unauthorised firms. Given that Recognised Funds are subject to a regime recognised as equivalent, the application of these requirements may be seen to be as unduly burdensome.

Similarly, for unauthorised firms which are EU AIFMs or EU MiFID firms selling in scope products to UK retail investors and which already comply with high regulatory selling standards, the imposition of these requirements may potentially have the effect of deterring sales into the UK.

Yes. The FCA has been explicit that distributors will need to carry out additional diligence on CCIs to assess if they need to provide additional information to meet the FCA’s standards. They will also need to ensure it is clear what access customers will have to redress under the FSCS and the FOS. 

The costs and charges which must be disclosed remain broadly unchanged from existing requirements. 

The Product Summary must disclose one-off entry/exit costs; ongoing costs; and transactional costs which will need to be calculated and disclosed as a percentage figure, alongside an aggregated summary. Performance fees and carried interests will also need to be identified and explained in easily understandable language alongside a practical example of what the fee could amount to. 

As is the case under a PRIIPs KID, a cost summary must also be provided. However, the cost illustration should show product costs over a single holding period. The FCA’s proposal is for this to comprise: entry and exit costs; ongoing costs; and transaction costs, presented as a percentage and as pounds and pence figures over a 12 month period. Performance fees and carried interest fees will not be included in the cost summary but disclosed separately. The FCA has proposed that firms use £10,000 as the representative investment, or £1,000 each year for CCIs with regular contributions. Firms will have discretion to use tools to enable consumers to enter their own investment amount to facilitate more meaningful cost illustrations as well as to provide supplementary information to aid consumer understanding. Distributors will need to consider their options in accordance with the Consumer Duty. 

The FCA has also clarified its proposed approach to the following cost disclosures: 

Although transaction costs for CCIs will align with the PRIIPs KID regime, the FCA acknowledges that the current methodology for transaction costs disclosure in PRIIPs KIDs is in places overly complex. It will consult on amendments in 2025. 

The FCA has also clarified that the disclosure of “pull through” costs will also be maintained. This requires firms to take account of the costs of underlying products they invest in. In respect of tracker funds however, the FCA proposes not to require funds whose objective is to replicate the composition of an index to pull through the costs of funds they invest in. This is to avoid market distortions from making index funds that invest in investment companies appear unduly expensive. 

This should be disclosed as risk factor rather than an ongoing cost. 

In addition to disclosing aggregated ongoing costs percentage manufacturers may also provide a breakdown of these costs to distributors where they consider that this additional information is helpful to facilitate consumer understanding. 

Where distributors provide an additional breakdown, they must ensure that the aggregated costs appears more prominent than any breakdown.  

Manufacturers will need to disclose both: (i) a standardised horizontal risk score; and (ii) provide a risk description. The risk score will be focussed on volatility and be on a one to 10 scale (rather than the current one to seven market risk measure score). See question nine below for further information on the risk scoring.  

The risk information should include a description of both risk and reward. It should describe factors that could impact both the risk and reward profile and affect performance. 

Distributors will need to assess, based on their understanding for their customers, whether and what amendments are required to the risk information provided to enable customer understanding. This assessment will be especially important when distributing overseas funds for which the manufacturer is not FCA or PRA authorised. 

The starting point for assessing the risk score will be the standard deviation of volatility of the product’s historical performance or proxy over the past five years. The FCA has set out a conversion metric of the PRIIPs Summary Risk Indicator to the CCI risk and reward metric: 

The FCA has also specified how the risk score will be determined for certain product types including those deemed as high risk or complex. 

These include CCIs which are: highly leveraged; structured so that an investor could lose more than they invest; derivatives; contracts for difference; contingent convertible securities; venture capital trusts and products with very low liquidity or that are not regularly priced. The FCA has proposed that these products should be assigned a minimum of nine on the risk scale. Products structured so that a consumer could lose more than their principal investment must be assigned a 10 and include a warning to that effect. 

For complex products such as structured products, the FCA has set out its expectations for risk ratings at both ends of the risk spectrum as follows: 

• for structured deposits, where the initial capital is subject to the same protections as a bank deposit, this will be the lowest end of the risk scale and manufacturers can automatically assign a one, subject to any specific features that may change the risk profile; and
• for capital-at-risk products with returns tied to the performance of multiple indices or featuring gearing, these should be given a risk score of at least nine. These types of products should also have a label to highlight the complexity and risk of consumers misunderstanding.

For all product types, the FCA emphasises that whilst volatility should form the basis of the initial assessment of risk, manufacturers and distributors will need to make their own assessment as to whether it accurately reflects the products risk and determine where it is necessary to amend the risk rating due to the existence of additional risk factors. 

The FCA has proposed that past performance should be disclosed using a line graph showing up to 10 calendar years of past performance where data is available. This is to allow for a comparison of performance between similar products. Firms will need to ensure that the past performance disclosure meets the following requirements.

The FCA has prescribed the use of 12 month data periods, a minimum of quarterly data points and the assumption of an initial investment of £10,000. Where a CCI has less than 12 months of performance data, firms must provide the available performance data with an appropriate frequency to enable an investor to make an informed decision.

Where applicable, benchmarks will need to be included in the line graph. For UK UCITS and non-UCITS retail schemes, manufacturers must include in their graph the benchmarks contained in their prospectus, where they have at least one. Manufacturers of recognised schemes, qualified investor schemes, and long-term asset funds have used one or more benchmarks, will need to include benchmarks in the graph regardless of whether they have been included in their prospectus. 

For other types of CCIs, the FCA has proposed that the graph should include a relevant benchmark to allow consumers to compare and assess the product’s performance, and to support their understanding of the performance information. The FCA has confirmed however that manufacturers will not be required to choose a benchmark, if the manufacturer considers that there is not a suitable one. 

All manufacturers will need to include either a statement explaining the reasons for the benchmarks chosen, or where no benchmark has been used, provide a short explanation of how investors can otherwise assess the product’s performance. 

For CCIs with less than 12 months of performance data, the FCA proposes to require a prominent statement to be included, explaining that the performance shown is for a short period of time and may not be representative of performance in the longer term. Firms will also have the option of not showing past performance for products that have less than a quarter’s worth of data. The Product Summary for such products will also be required to include a statement that there is insufficient past performance data reliably to illustrate the historic performance of the product.

For other CCIs where past performance will not be relevant, such as structured products or fixed term investments (but excluding insurance based investment products), a narrative must instead be provided explaining the factors that are likely to produce negative or positive performance and other factors that may impact their risk and returns. 

In respect of closed-ended investment companies listed on an exchange the FCA has proposed that firms should continue to additionally provide the NAV and may add a separate line graph to the product summary that compares share prices against NAV per share over the relevant period. The FCA has also stated that manufacturers and distributors can also provide additional information to help consumers understand the interaction between share price and NAV.

The FCA's proposal is that the graph is supplemented with information on past performance, including a warning explaining that past performance is not a guide to future performance and, where applicable, the exchange rate used to convert the reference investment figure to an equivalent amount, where the product is not priced in pound sterling.

Although the manufacturer will have initial responsibility for providing past performance information in the Product Summary, as distributors have the discretion to create their own more bespoke Product Summaries, they will need to consider if additional information needs to be provided. The FCA has suggested that they may consider for example, adding an appropriate cash benchmark to the graph to provide more context and help consumers understand the risk/reward of investing over holding cash savings. Distributors may also opt to amend the assumed investment amount to reflect an investor’s actual investment sum. In this regard, the FCA has stated that manufacturers will need to work with distributors in response to reasonable requests to support an adjustment of the initial investment. 

The FCA has confirmed that the new rules will take effect either when the Policy Statement is published (expected H2 2025) or shortly after. Although firms will be able to apply the rules as soon as they are able, a 12-to-18 month transitional period will apply. During the transitional period, existing PRIIPs KIDs and UCITS KIIDs or equivalent disclosures produced and communicated in line with current obligations will be considered compliant. Investment companies currently subject to an exemption from the requirement to produce a PRIIPs KID will have 12 months in order to comply with the new rules.

The regime applies to all offers of CCIs to investors which meet the definition of a ‘retail client’. This means that offers to investors categorised as high net worth investors or sophisticated investors will only be excluded from the regime if these investors are capable of being opted up to elective professional client status. A point of difference under the new regime compared to PRIIPs is that the less stringent non-MiFID opt up criteria under COBS 3.5.3R will apply. This may enable private equity funds offering co-investment opportunities to certain investors and which currently produce a PRIIPs KID to avoid the requirements of the CCI regime (assuming investors meet the non-MiFID opt up criteria). 

It is clear that all firms will need to do more both initially on implementation and on an ongoing basis to meet the requirements of the CCI regime than the PRIIPs and UCITS regimes. Manufacturers will need to meet the baseline disclosure requirements. However, the most impactful changes, particularly for distributors, will be to ensure that the discretion to make additional or amended disclosures is exercised appropriately. This will require additional analysis and in many circumstances, data to support any assumptions or test any conclusions regarding customer understanding. Firms will need to consider the below.

• Arrangements with outsourced reporting service providers: firms will need to engage at an early stage with their existing service providers that currently support them in creating the KID or KIID to understand how they can continue to use their services to produce the Product Summary. As noted above, careful thought will need to be given as to how to deal with the discretionary aspects of the Product Summary considering the additional information required and judgment to be applied. 
• Disclosure arrangements and customer communication processes: firms will need to implement a process for delivering the Product Summary. A comprehensive framework will need to ensure that firms identify customer information needs and make appropriate disclosures meeting both the prescriptive and discretionary requirements of the Product Summary. It will be particularly important, for example, to facilitate an assessment of a CCI’s risk profile beyond volatility and consider what additional risk information should be provided in respect of past performance.
• Data strategy: firms will need to justify their approach to identifying and meeting customer information requirements and monitor customer outcomes. This will require appropriate management information and data. Firms will need to consider this as part of any enhancements to firm’s product governance processes.
• Product governance arrangements: firms will need to review their product governance procedures and identify relevant areas for enhancement particularly considering the distribution chain and distributor’s information needs. Review processes will need to be assessed to ensure that they allow for collaboration, feedback and oversight of other parties in the distribution chain. 
• Distribution agreements: these will need to be reviewed to ensure they provide for appropriate collaboration, support and feedback between parties across the distribution chain. 
• Co-manufacturing arrangements: where there is more than one manufacturer, it will need to be agreed who should be responsible for updating the Manufacturer Information.
• Dual standards for EU firms: for firms operating in the EEA, they will have to ensure their arrangements meet dual disclosure requirements (i.e. CCI and UCITS KIID/PRIIPs KID). As the requirements are separate and they will need two distinct disclosure documents for EEA and UK marketing, they may need to consider what additional compliance resource is required to meet divergent standards on an ongoing basis. 
• Training: staff will need to be trained on the new regime and the firm’s updated processes for meeting the new disclosure requirements.