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“The UK has a significant and rapidly growing retail investment market. However there remain areas where further reforms can build upon existing strengths and widen access,” the consultation document said.

Under the EU rules, all investment products sold to retail investors in the bloc are required to produce a key information document to disclose extensive detail on expected investment returns based on a range of possible market scenarios.

Before the new rules were enforced, asset management groups relied on past performance in their pre-sale fund literature, although they have always been careful to stress this should not be used as an indicator of future returns.

However, with Priips, asset managers are required to provide forward-looking performance scenarios – something they claim is highly misleading for investors.

Asset managers have consistently criticised the documents, claiming the performance and cost information contained in them can give an overly generous impression of returns to clients.

“The Priips regulation sought to help retail investors make sense of a complex investment landscape. That is not what it achieved,” the consultation document said.

“Instead, it created unnecessarily prescriptive measures that led to information being presented to investors in unhelpful or, worse, misleading ways.

“In addition, the burdensome requirements caused firms to restrict retail investor access to their products, reducing choice and opportunities rather than enhancing them.”

As part of the UK’s proposed overhaul, the Financial Conduct Authority would oversee the format and presentation requirements asset managers need to adhere to when investment products are sold to the retail market.

Asset managers should be able to incorporate any disclosure requirements into existing information documents, the government said, and there should no longer be a need for firms to provide all the information necessary for an investor to compare different products and come to a decision “since this information can vary widely between different investors”.

“Instead, the government believes that retail disclosure should ensure that a retail investor understands the nature of the product that they are purchasing to a sufficient degree to enable an informed choice,” the consultation document said.

Richard Stone, chief executive of the Association of Investment Companies, said firms would be breathing a “collective sigh of relief” on seeing the proposed removal of Priips regulation.

“We have lobbied long and hard for the abolition of key information documents which dangerously mislead investment company investors.

“We applaud the abolition of Priips and will be arguing for a disclosure regime which helps investors make better investment decisions and puts investment companies and open-ended funds on a level playing field. The FCA should act swiftly to sweep away the confusing mishmash of disclosures and put in place a fair and transparent framework.”

The consultation runs until 3 March 2023.

To contact the author of this story with feedback or news, email David Ricketts