UK regulator warned of 'serious flaws' in PRIIPs documents

Independent boards of a number of Baillie Gifford investment trust clients have written to the UK’s Financial Conduct Authority expressing concern about key information documents (KIDs) required under the Packaged Retail and Insurance-based Investment Products (PRIIPs) regulation.

The Edinburgh-based asset manager said there were “serious flaws” in the design of the disclosures in the KIDs and that it supported the views expressed by the investment trust directors.

The company said scenarios illustrating the potential return to shareholders under certain market conditions were based on past performance and could lead to investors receiving potentially misleading information at the point of sale.

Graham Laybourn, partner responsible for compliance and legal in the firm, said: “I would struggle to suggest that these new disclosures meet the clear, fair and not misleading test.”

James Anderson, manager of the £6.5 billion (€7.3 billion) Scottish Mortgage trust, added: “We are extremely disturbed by the requirements of the Key Information Document. We do not believe that reliance on past performance data is ever a sufficient guide to the many possible future outcomes in stocks and markets.”

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