TISA calls for a comprehensive review of ‘confusing and overwhelming’ consumer disclosures as FCA consultation ‘represents a missed opportunity’ to build a regime which empowers consumers
In its submission to the FCA’s consultation on further proposals on product information for Consumer Composite Investments (CP25/9), TISA calls for a more comprehensive consumer disclosure review to overhaul the current regime and ensure it is effectively supporting consumers in their decision-making.
Spokesperson for TISA, Sophie Legrand-Green said:
“Whilst this consultation is welcome, we cannot help but feel it represents a missed opportunity to create a consumer disclosure regime which builds the confidence and knowledge of UK consumers.
Many find these reporting documents confusing and overwhelming, leading them to miss out on valuable information which could support them to make better informed decisions. We need to ask ourselves what consumers need to make decisions, and how this can be presented in an accessible way that consumers can read and understand. This could be through increasing consistency across retail investments and pensions, recognising that consumers are more likely to understand and engage with a reduced amount of information in a Product Summary and enabling greater opportunities for innovation.”
Relating to the scope of CP25/9, TISA outlines several recommendations to improve the current approach and ensure consumers are provided with useful data. This includes:
- Aligning the disclosure regime with the consumer duty to support informed decision-making. This could be through a single source approach that reduces the amount of overlapping additional regulatory disclosure documents provided to consumers to ensure they are provided only with the information needed for informed decision making. It could also include reducing the amount of information included in a Product Summary by prioritising information essential for decision-making.
- Incorporating explicit transaction costs into performance disclosures rather than in the costs & charges disclosures as proposed. Furthermore, by including transaction costs in performance figures, rather than in headline cost figures, it mitigates the risk of consumers’ ‘double-counting’ costs and making misinformed decisions.
- Creating additional amendments to the proposed rewrite of Article 50 to facilitate more consistent, accessible and intelligible disclosures, and reduce consumer confusion. For example, under the current rewrite, consumers would receive three different cost disclosures, showing similar information, presented in different ways and with slightly differing figures. By adopting a more consistent approach, it reduces the risk of confusion and increases consumer confidence.
- Adopting a 2-year transition period that is consistent across all CCIs with a universal adoption date, to reduce consumer confusion and ensure firms have operational capacity to manage the transition.
Sophie Legrand-Green added:
“We support the FCA’s objectives which underpin this consultation and we believe there are several opportunities to improve consumer understanding presented in this consultation. However, we urge the FCA to consider conducting a more comprehensive consumer disclosures review, which will allow the regime to be moulded in a way which empowers consumers and support firms.
We look forward to supporting the FCA as they continue this work, and encourage them to adopt a collaborative approach as seen during the ongoing Advice Guidance Boundary Review”
Notes to editors
- For a copy of the full consultation response please contact tisa@tendoconsulting.co.uk
- 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 270 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.