In December 2025, the UK Financial Conduct Authority (FCA) published its final rules for its Consumer Composite Investments (CCI) regime which is coming to retail markets as a broad replacement for the European Union (EU) PRIIPs framework.

The draft rules that were published in December 2024 had a consultation period in early 2025, allowing the industry (such as trade bodies and investment firms (including the UK Structured Products Association) to react and provide responses. The final rules have taken much of this feedback into account and the FCA has tried to strike a balance between its own vision for consumer protection and the judgment of financial bodies and firms with decades of financial experience.

Principles and Prescription

The primary driver for the introduction of CCI is to provide a more principles based regime that aligns with the FCA’s 2023 Consumer Duty framework. The EU has always favoured heavily prescriptive regulation and the FCA has traditionally focused on following principles geared towards protecting consumers. This fundamental philosophy distinction is fascinating, and the two approaches both have advantages and disadvantages.

The argument for prescription is that all parties have clear obligations to follow and that it is better to try ensuring that all firms treat all clients and investments in a fair and consistent manner. There is a lot of logic to this idea, however, it can result in many situations where the best interest of the investor or appropriate classification and selection of investments does not happen. This was particularly evident in the PRIIPs Key Investor Document which was heavily criticised for unintuitive and misleading results for risk ratings, performance scenarios and cost calculations. Financial services are always in evolution with an ever expanding set of investment opportunities and distribution channels. Therefore, there is a danger that prescriptive rules that take many years to draft and implement can be unable to adapt to changing landscapes.

Principles based regimes seek to put more responsibility on financial firms by having high level rules that must be followed in spirit by firms to all customers. UK regulation has long followed this approach with Consumer Duty, and Consumer Composite Investments being firmly principles based. This avoids the inconsistencies and loopholes that overly prescriptive regimes can generate but requires greater discipline from firms and potentially more oversight from regulators. Since fewer detailed rules are in place firms must be careful to follow the spirit of regulation to show fair outcomes for customers.

Implementation and Concerns

The FCA has also acknowledged that implementation of CCI is a complex and costly process. Due to this, an 18 month implementation period has been put in place running from the date of publication of the final rules in December 2025 and finishing June 2027. CCI will take effect in April 2026 meaning that there is a 14 month window where firms can elect to provide documentation and serve customers under either PRIIPs or CCI. In my view, while a sufficient implementation period is to be welcomed, a 14 month window is too long to have different firms using either regime. This will potentially create confusion as advisers and investors will find it harder to compare investments that are being presented differently. It might be better to have a shorter three or six month window at the end of the implementation period during which time firms are allowed to use either regime.

Key Changes for Structured Products Under CCI

One of the more important changes for structured products under the CCI is the changes to cost and risk calculation. Under CCI, cost calculations are generally to be shown as per annum. However, when costs and timelines are known in advance costs can be stated and presented as an annual equivalent. This is important for structured products since they are primarily buy-and-hold investments over a fixed horizon. Therefore, it is unfair to imply that those costs apply in the short-term for a long-term structured product investment.

Risk ratings are an important part of the CCI, just as they are for PRIIPs and UCITS. The FCA has chosen to make some significant changes from PRIIPs, one of which is to base calculations on ten-year historical volatility rather than five years.

Ten years is a longer window and while that reduces dependence on recent asset behaviour, it also means that risk ratings are slower to change over time. It will also present more issues for underlyings with shorter track records, such as thematic or custom ETFs and indices and companies with recent IPO.

The other change for the whole industry is to move to a one to ten scale instead of one to seven under PRIIPs and UCITS. This allows for greater granularity at the cost of some potential confusion when moving regimes, since a maximum seven scale is never going to align with one that goes up to ten.

The final rules confirmed major changes to risk calculations ensuring structured products are treated fairly. The first is to drop the usage of historical volatility calculations of the investment itself. This is the simplest way to assess risk of funds but cannot be applied to structured products. The rules now allow for a PRIIPs style VaR equivalent volatility (VeV) approach (using ten years of data). This means that structured product firms can use broadly the same systems to calculate risk under CCI as they will typically have in place for PRIIPs.

In the draft rules there were references to automatically assign a risk rating of at least nine out of ten to structured products with multiple underlyings (“worst-ofs”) or gearing of any kind. The motivation for this appeared to be driven by complexity concerns, however, the final rules now allow for calculation under the VeV method for all structured products, relying on that detailed calculation to bring out risk when it is present and not to make a blanket adjustment. This is the most sensible approach and avoids unfairly high-risk ratings being assigned.

The FCA places high importance on the deposit sector which is backed by the FSCS scheme. All deposits are automatically given a risk rating of one out of ten to reflect the wrapper. This includes structured deposits and may boost their attractiveness in the future.

The introduction of the CCI to the FCA’s investment rules regarding Consumer Duty will give further protection to investors and clarity for firms and represents a step forward for the market.