FCA’s Final Consumer Composite Investment Rules Welcomed as a “Victory for Common Sense” by AIC

The Association of Investment Companies (AIC) has strongly welcomed the Financial Conduct Authority’s (FCA) final rules on consumer composite investment disclosures – officially published as “Supporting informed decision making: Final rules for Consumer Composite Investments” (PS25/20).

Marking a significant milestone for the investment industry, AIC Chief Executive Richard Stone described the outcome as “a victory for common sense” that recognises the unique characteristics of investment companies, delivering benefits for investment companies, their shareholders and consumers.

Clarity Restored for Cost Disclosures

One of the headline changes implemented by PS25/20 is the FCA’s decision “not” to require other funds to ‘pull through’ the costs of investment companies when investing in them. This critical update reverses rules introduced in 2021 (and those under PRIIPs), which saw fund-of-funds and multi-asset products appear artificially expensive because of duplicated cost disclosures.

Stone explained, “This removes a cloud that’s been hanging over the industry and returns the market to a pre-2021 ongoing charge figure that everyone used and understood. It’s particularly helpful for fund of funds managers whose products were made to look artificially expensive under the PRIIPs rules.”

Ending Double Counting and Supporting Investors

The previous approach to cost disclosures has affected investment flows into the sector, not only from fund-of-funds investors, but also wealth managers and other professionals. The FCA’s reforms address these distortions by ending double counting, improving the relevance and accuracy of cost disclosures and acknowledging the fact that investors’ returns are based on the share price.

More Meaningful Cost Information

The new rules also clarify that costs associated with gearing and the upkeep of real assets will no longer be included in the ongoing charge figure. For investors, this means headline cost disclosures for investment companies will be more relevant and meaningful.

Stone commented, “It’s good to see that investment companies will have the same implementation timetable as other funds and flexibility to adopt the rules earlier. These changes make investment companies’ cost disclosures more useful for investors.”

Industry Collaboration Achieves Progress

The AIC emphasised that these reforms were the result of an industry-wide collaborative effort, noting that many stakeholders have campaigned tirelessly for improvements that genuinely benefit consumers.

Timetable for adoption

The FCA has set out a clear timetable for the adoption of the new rules in PS25/20:  The final rules take effect from 1 January 2026.  However, firms may choose to implement the new requirements ahead of the schedule.  The FCA encourages this flexibility to support businesses that are ready to update their disclosures sooner.

Looking Forward

With the publication of PS25/20, the FCA has ushered in a new era of clarity, fairness and transparency for both industry participants and UK investors. The AIC’s endorsement underlines the importance of thoughtful regulation in supporting informed decision making and driving the growth of the UK’s investment sector.

All affected firms including investment companies, fund-of funds managers and other retail investment providers must update their disclosure documents (such as Key Information Documents (KIDs) or consumer-facing materials) to reflect the revised cost calculation requirements by the implementation deadline.