UK: FCA Policy Statement on Consumer Composite Investments (CCI)

Why should I read this?

FCA Policy Statement PS25/20 “Supporting informed decision making: Final rules for Consumer Composite Investments” sets out final rules on how the new disclosure regime for retail investment products will apply.  The disclosure regime is intended to be more straightforward and less rigid, avoiding forced comparisons between products that are not close substitutes, avoiding fixed templates and enabling more innovation in disclosure.

The FCA acknowledges that the new consumer composite investments (CCI) regime, applicable to all retail investment products, is a significant departure from the way in which product information is presented currently in the PRIIPs KID, UCITS KIID and NURS KII.  The CCI regime introduces a unitary disclosure regime for all retail investment products in place of the patchwork of inconsistent regulation of different products that the UK inherited from the EU on Brexit.

The CCI rules are part of the FCA’s response to its secondary growth objective and should be seen as part of a package of reforms related to increasing access to and the appeal of retail investment products in the UK, alongside:

• The introduction of targeted support;
• the advice guidance boundary review;
• The rebalancing of language relating to risk and reward in consumer investment products to expand consumer access;
• The planned reduction of the cash ISA allowance for under 65s to £12,000 pa; and
• The simplification of the FCA Handbook in line with the Consumer Duty.

The Policy Statement follows two consultation papers:

• CP24/30 “A new product information framework for Consumer Composite Investments”
• CP25/9 “Further proposals on product information for Consumer Composite Investments”

The consultation has shaped the proposals with the FCA taking on board a number of concerns raised during the process.  The final rules are an improved version of the original proposals, including changes relating to:

• The calculation of the ongoing costs figure (OCF);
• A single adoption date for all products; and
• The presentation and calculation of the risk and return rating.

See our previous client briefing “UK: Consumer Composite Investments consultation”.

What do I need to know about the CCI final rules?

Principles

The FCA expects the new disclosures to be engaging for investors and at the heart of the consumer journey, enabling good decision making. There are clear parallels, and explicit references, to the Consumer Duty throughout the rules.

The FCA expect consumer information to be accurate, simple and jargon free in order to allow consumers to understand what they are investing in and to be able to easily compare investments. The FCA has indicated that readability and accessibility will be criteria they will look to assess in their post implementation review.

Scope

The regime will apply to any firm that manufactures or distributes a CCI to retail investors in the UK. Not all persons or entities who carry out a CCI-designated activity will be authorised persons. The FCA has exercised its powers under the Consumer Composite Investments (Designated Activities) Regulations 2024 (the CCI Regulations) to make rules that also apply to non-authorised persons in relation to their CCI activities.

The scope of the CCI regime is set out in the CCI Regulations.  Firms will have to review their product suite to determine whether their products are in scope but in practice this should not deliver a different result from the current regime.

In order to be excluded from the CCI regime, “not for retail” products must be clearly marked as such on all communications and marketing materials and the product manufacturer must take steps to ensure that the product is not directed at or marketed to retail investors.  In the original proposals as consulted upon, there was a further requirement that a not for retail product should require a £50,000 minimum investment, however, following feedback that such a limit might have the unintended consequence of causing certain not for retail products involving derivatives to fall outside the scope of the CCI rules, this threshold has been removed.

US exchange traded funds (ETFs) are expressly in scope where recognised under section 272 of FSMA. However, the FCA notes that, as at the date of the policy statement, none are currently recognised in the UK.

Timing

All in-scope products, including closed-ended funds and funds recognised under the OFR, will be required to adopt CCI rules by 8 June 2027, 18 months after the policy statement was published.

Firms may choose to produce product summaries from 6 April 2026 when the product summary rules in the CCI regime formally commence on a voluntary basis. 

Manufacturers and Distributors

Manufacturers – the definition of manufacturer is set out in Regulation 5 of the CCI Regulations.

A manufacturer of a CCI is a person who creates, develops, designs, issues, manages, operates, or carries out a CCI, or makes changes to a term, condition or feature of a CCI.

A manufacturer includes a firm which makes a material contribution to the manufacture of a CCI in collaboration with other manufacturers. There are some situations in which there are multiple manufacturers.  If there are two or more co-manufacturers of a product, the FCA expect them to agree the division of their responsibilities in writing and to co-ordinate their efforts to meet FCA requirements.

Distributors – the definition of distributor is set out in Regulation 5 of the CCI Regulations.

A distributor of a CCI is a person who sells, offers to sell, deals or arranges deals, or advises on (including making personal recommendations to invest in) CCI.

The definition of distributor means that even if an overseas firm is able to use an exemption to avoid having to be FCA authorised, such as the overseas persons exemption which is often used by “fly-in/fly-out” overseas firms with limited business in the UK, they will be subject to the CCI regime and will need to comply with the new rules.

Product summary

The product summary is the successor to the KIID/KID.  It will be retail-focussed.  Manufacturers will have substantial freedom of design, as there is minimal prescription in the new rules regarding format and the FCA rules are neutral as to what technology may be used to deliver it, or in the FCA’s terms “technology positive”.  Interactivity is encouraged if not expected. 

New handbook rule DISC 1A.2.1 R (1), provides that the product summary will be:

“a short and concise document in English, titled ‘product summary’ and setting out appropriate information about the essential characteristics of the consumer composite investment…”

The FCA is still mandating some standardised elements of disclosure to enable consumer comparisons. It says these are limited to essentials, but even so they do cover some of the critical elements of the new disclosures and may curtail that feeling of flexibility.

The prescribed elements of the product summary are intended to be comparable between products and so are subject to standardised methodologies.  Together they form the core information, which must be made available in machine readable format:

Costs and charges

The basis for the CCI costs disclosure is conceptually similar to that for the UCITS KIID.  There are five categories of costs, they are calculated over the preceding 12 months and the default presentation is to show the gross costs in relation to an assumed investment amount of £10,000, although a similar amount in another currency can be used if relevant, eg USD 10,000 for a dollar denominated investment.   Not all products will incur all of the categories of costs but all products will have an ongoing costs figure (OCF).

CCIs will not be required to include gearing and real asset maintenance costs in their ongoing cost calculations.

The methodology for calculating costs will be the same for all CCI products except for structured products, which will have a separate methodology. 

Costs for products with maturity dates of less than one year will be shown over the lifetime of the product.

Under UCITS, OCF stood for “ongoing charges figure”.  Under CCI, the FCA appear to have renamed this as “ongoing costs figure”, however, they use both phrases in the policy statement, so it is unclear if this is intentional or not, although of course costs and charges are different.

Risk and return (reward)

Since the consultations were launched there has been a change of approach by the UK Government and the FCA in relation to risk warnings on financial services products.  It is now thought that the approach to risk warnings has been too negative and cautious and that this has contributed to the UK having an unusually low proportion of retail investors compared to other G7 nations.  Accordingly, the FCA are seeking to rebalance the approach to risk warnings, starting by referring to both risk and return, rather than just risk.

The underlying CCI risk and return (reward) score is based on the same calculation methodology as the UCITS KIID synthetic risk and reward indicator (SRRI).  However, the CCI risk and return score will be ranked on a scale of 1 to 10 (rather than the UCITS KIID’s 1 to 7 scale) with the maximum score of 10 equating to an annualised volatility interval of at least 50% (compared to the UCITS KIID’s maximum score of 7 equating to an annualised volatility interval of at least 25%). 

The score will be displayed on a graphic scale of 1 to 10, annotated at 1 with the words “Lower risk, potentially lower return” and at 10 with the words “Higher risk, potentially higher return”.

The risk and return score will be accompanied by a narrative description of the material risks and potential rewards of the product.  These descriptions should be written in an engaging and concise style.

Certain minimum scores and modifiers apply when calculating a risk and return score.  The FCA requires a minimum risk score for products that are considered high-risk or of unknown volatility.  

There is some uncertainty as to whether products which are structured so that a consumer could lose more than the amount of their initial investment must be assigned a 9 or 10 due to inconsistencies in the draft regulations, which we expect to be revised before the rules come into force on 6 April 2026. 

In limited circumstances it will be possible to adjust a risk and reward score downwards if there is at least 90% capital guarantee or if the initial score is not representative of overall risks of the investment.  Downward adjustments should only be undertaken cautiously.

Past performance

In place of the UCITS KIID bar chart, the CCI past performance graphic is a graph showing performance over the previous ten years.  Because this a line graph and cumulative, you don’t get the stark downward performance trends that you can see with the bar chart. 

Data points are now monthly rather than quarterly to more accurately reflect volatility.

The standardised £10,000 also survived the consultation and there is now clarification that if the relevant currency is non GBP then it should be an equivalent divisible by 1,000 to make it appear less random.

The consultation proposal, for products with less than 10 years of past performance which are the result of a merger of two or more funds, was to show the performance of each of the pre-merger funds.  This has been dropped as it was considered too confusing.  If there is one predecessor fund for a UCITS or NURS that formed a new fund it appears that the rules on simulated past performance in COBS apply as there is new guidance cross referring to them.

For UCITS and NURS with target or constraining benchmarks in their prospectuses, the performance of those benchmarks must be included.  In a change from the consultation, comparator  benchmarks may also be included.  This is for consistency with the requirements for other CCIs.  The comparator must be the same as that used in the prospectus. 

If objectives and strategy have changed in the last 10 years, new guidance says not only that this must be noted but that the benchmark shown must be appropriate for the relevant periods.

Manufacturer and distributor responsibilities

In the feedback to the consultation respondents asked for a clearer delineation of responsibility between manufacturers and distributors.  The FCA has sought to make the delineation clearer, specifically dropping the proposal to allow distributors to redraft product summaries, which respondents were concerned gave rise to difficult questions of liability for the product summary, both to consumers and the regulator.

If there are one or more co-manufacturers of a product, the FCA expect them to agree the division of their responsibilities in writing and to co-ordinate their efforts to meet FCA requirements.

Distributors and product summaries

The consultation paper proposals that distributors would be able to use information provided by manufacturers to create their own product summaries did not survive to the policy statement.  Under the CCI rules the creation of a product summary will be the responsibility of the manufacturer. Distributors will be required to deliver these to consumers, unamended.  This means the traditional roles of the two parties is carried forward.

Distributors do not have to provide the full product summary pre-sale, however, the policy statement  introduces rules on items the FCA thinks distributors should highlight pre-sale to support an informed decision, with certain minimum requirements, including a brief explanation of the product, the OCF and the risk and return score.  The FCA wants to ensure firms have freedom and regulatory certainty to explain and contextualise disclosures.

Durable Medium

The consultation proposal was that investors should also receive the product summary in a durable medium at the point-of-sale or as soon as reasonably practicable afterwards.  Under the CCI rules distributors are required to deliver product summaries to consumers, unamended, in a durable medium at the point of sale or shortly after, having also made it available for consumers pre-sale.

The definition of ‘durable medium’ in the FCA Handbook Glossary was recently amended when the MiFID Org Regulation was integrated into the Handbook.  The FCA increased the “digital first” assumption though the definition was effectively unchanged for non-MiFID business. 

The CCI rules permit firms to use websites and other technology, and methods such as layering and graphical representations to deliver product summaries, however, the difficulties in rendering these into a durable medium means that for those firms looking to be early adopters of the CCI rules it is difficult to see the product summary being anything other than a PDF.  

Application of CCI beyond the regulatory perimeter

High level standards will apply to some unauthorised firms carrying on activities in relation to CCI, e.g. to overseas manufacturers (but not OFR recognised funds, which have been deemed equivalent and so follow their own requirements in their home state).  

Unauthorised firms carrying on activities in relation to CCI will be required to comply with rules equivalent to Principles 1, 2, 3, 10 and 11 (PRIN 2.1).

Distributors dealing with unauthorised manufacturers must:

• take care when relying on information or communications from those unauthorised persons; and
• make consumers aware of whether they will have access to FSCS or FOS or other redress.

The FCA aims to be proportionate in this respect and to only regulate these firms to a more limited extent than authorised firms.

Open-ended funds – transitional arrangements

The statutory exemption for UCITS, NURS and OFR funds from the need to comply with the PRIIPs rules and which allows them to continue to produce KIIDs expires on 31 December 2026.  To avoid such funds being required to produce PRIIPs KID or a product summary for the period 1 January 2027 to 8 June 2027 until the CCI regime kicks in, we expect that there will be a statutory instrument (SI) to further extend this exemption, although no such SI has yet been published.  

Listed open-ended funds

The consultation proposal was that UK listed funds would be subject to the full CCI rules, including the requirements of DISC.

The FCA rejected the argument that UK listed funds should be exempt from the CCI rules on the basis that the disclosures that they are required to make under the UK Listing Rules and the Companies Act are sufficient to meet the concerns that CCI is intended to address.  The FCA noted that the requirements of the Listing Rules generate documents that lack the clarity and accessibility that the CCI envisages and the requirements are geared to the needs of sophisticated market participants, not retail investors. 

However, the FCA did accept that UK listed funds that comply with the Listing Principles in the UK Listing Rules at UKLR 2.2 can be deemed to have complied with the principles in DISC.

Consumer Duty

Consumer Duty will apply to CCI products, their manufacturers and distributors.  In H1 2026 the FCA plan to consult on changes to rules on the application and requirements of the Duty, including in relation to firms working together in distribution chains and on the sharing of information through the chain.

Practical implications

There is a lot to achieve in 18 months.  The new rules will impact numerous existing documents and processes.

Scoping

Consider how many product summaries and core information(s) might be needed, if you might be a manufacturer or distributor and therefore which obligations are in play.

References to disclosure documents

There will undoubtedly be references to previous disclosure documents scattered throughout prospectuses and other fund documents. Depending on how flexible the final CCI regime ultimately is and how firms choose to use technology to support the new disclosures, it may not be as easy as replacing the word KIID with a new document name. Firms will need to think about how they explain to investors how they can access and engage with the new disclosures.

This will be a point for investor letters and other forms of communications to investors. Explaining how to use the CCI disclosures will be essential to ensuring investors have received the information they need to make relevant decisions.

Websites

There will be website links pointing investors to where they can access previous KIIDs which will need to be updated and replaced with new web pages built to support the new CCI disclosure formats.

Agreements

Firms should consider whether the new regime will lead to any changes to management agreements and product governance.

Firms should think about how the new regime will impact existing distribution agreements and whether any changes will need to be made.  If firms need to renegotiate their distribution agreements this could be a lengthy exercise which should be factored into any project timetables.

If multiple firms are involved in manufacturing products then they will need to consider the new requirement to enter into written agreements setting out the roles and responsibilities of the parties that collaborate in manufacturing CCIs.

Factsheets

It is as yet unclear what the impact of the CCI regime will be on factsheets.  If firms decide to stop publishing factsheets the impact will need to be considered and old factsheets will need to be removed from circulation.

External KIID/KID/KII providers

Firms will eventually stop publishing KIIDs as we currently know them and it remains to be seen whether existing external providers will be able to support the new disclosure rules.  If firms no longer wish to work with these providers then they should consider how to terminate any existing agreements and how much notice needs to be given before such termination.  If firms do intend to continue working with a provider to meet the new CCI regime we query whether existing agreements, T&Cs or SLAs need to be amended to clarify the scope of work.

Next steps

Firms may choose to produce product summaries from 6 April 2026 when the CCI regime formally commences.

All in-scope products (including closed ended funds) will be required to adopt CCI rules by 8 June 2027, which is in just under 18 months’ time. 

Our webinar

On Friday 12 December 2025 Michaela Arter, Philip Spyropoulos, Julian Brown, Tim Fosh and Sarah Kopec delivered an insightful webinar on ‘The new Consumer Composite Investments (CCI) regime webinar’ discussing the final rules and their impact on the investment landscape.

You can watch the webinar here.

How Eversheds Sutherland can help

Our team have been advising on regulatory interpretation and product development for the fund management industry since the 1980s and we were at the forefront of the implementation of the UCITS KIID and PRIIPs. Our in depth understanding of the sector and experience with the practical implementation of those regimes mean that we are very well placed to guide you in complying with the changing regulatory environment.