FCA disclosure reforms risk driving consumers away from investing, TISA warns
TISA has warned that the FCA’s proposed reforms to consumer investment disclosures risk undermining efforts to build a stronger UK retail investment culture, with inconsistent and increasingly complex cost information potentially confusing consumers, eroding trust and encouraging more savers to leave their money in cash.
In its response to the FCA’s consultation Simplifying Consumer Investment Disclosures, TISA called for the regulator to instead align cost disclosures with the CCI regime and to scrap cumulative effect of cost disclosures entirely.
TISA’s response also warned that proposals to show the effect of charges over the lifetime of a customer relationship could encourage consumers to focus on low cost rather than overall value and performance.
“The UK is trying to give more people the confidence to move from saving to investing, but parts of these proposals risk pulling in the opposite direction. Consumers could see different and progressively higher cost figures as they move through the investment journey, creating confusion and undermining trust in both providers and investing itself.
There is a real risk that rather than simplifying disclosures, the FCA will add complexity and inconsistency, making it harder for consumers to make informed financial decisions.
Disclosures should help people make better decisions, not overwhelm them with additional figures or encourage them to assume that the cheapest investment is automatically the best.”
TISA recommends that the FCA:
- Align pre- and post-sale cost disclosures with the CCI regime, focusing on separate ongoing and one-off product cost figures and keeping transaction cost treatment consistent.
- Remove cumulative effect of cost disclosures, including lifetime charge projections, where the consumer benefit is unclear and burden is high.
- Avoid nudging consumers about cash savings rates when they are ready to invest,instead adopt the notification approach taken in respect of cash held in pensions.
- Future-proof rules for agentic AI use, with a clear FCA plan in line with the Mills Review recommendations.
- Review disclosure rules across wrappers to ensure consumers receive consistent information for the same underlying investment.
ENDS.
Notes to editors
- A full copy of TISA’s response to the FCA consultation on Simplifying Consumer Investment Disclosures (CP26/24) is available on request.
- FCA consultation CP26/24: Simplifying consumer investment disclosures can be found here
- In its response, TISA recommends the FCA adopt an approach for investment disclosures similar to the existing rules for cash held in non-workplace pensions:
- Under COBS 19.12, firms must issue a warning where more than 25% of a non-workplace pension, exceeding £1,000, has been held in cash for six months, highlighting inflation risk and illustrating the potential long-term impact.
- TISA is a not-for-profit membership organisation committed to improving the financial wellbeing of all UK consumers by working collectively with the financial services industry to deliver solutions and champion innovation, for the benefit of people, our industry, and the nation.
- TISA has approximately 260 member firms involved in the supply and distribution of savings and investment products and associated services. Members include the UK’s major investment managers, retail banks, online platforms, insurance companies, pension providers, distributors, building societies, wealth managers, third party administrators, FinTechs, financial consultants, financial advisers, industry infrastructure providers and stockbrokers.