TISA Calls for The FCA to Radically Reconsider the Purpose and Function of Disclosure – Women Most Affected
New research from The Investing and Saving Alliance (TISA) and The University of Nottingham has underscored the need for a radical transformation in financial communications to empower people to invest, particularly women. The findings highlight the barriers posed by convoluted language, regulatory jargon and lengthy documentation, contributing to widening gender gaps in financial participation.
According to additional research by TISA with Oxera, lengthy documents deter potential investors, with a notable 21-24% drop-out rate observed once individuals begin their investment journey.
The research found that for people who have not already invested, finding information about S&S ISAs is considered time-consuming and 25% found it difficult, or very difficult, to understand the language used. This rises to 34% for women.
TISA designed a new Digital KFD prototype, reducing the total word count from over 4,000 words to just under 600 and taking the reading time from over 20 minutes, to under 5 minutes for every participant. The findings indicate that shorter, segmented information with succinct explanations significantly improves the reading experience. For instance, the Digital Key Features Document (KFD) reduced the word count, removed jargon, and used shorter sentences, resulting in increased reader engagement.
The research raises serious questions about the point of disclosures in KFDs if consumers do not read or understand them. In 2023 only 5 out of 19 FCA Policy Statements detailed any substantive considerations of its Public Sector Equality Duty – this is despite publicly available research about how individuals with certain protected characteristics engage with different channels through which disclosure is made.
TISA urges the FCA to prioritise diversity and inclusion in regulatory policymaking and enhance the use of behavioural science to understand how women, and different cohorts of consumers, engage with financial communications. By integrating diverse perspectives and behavioural insights, the FCA can design more consumer-centric policies and disclosures in efforts to bridge the investment gap and remove barriers to women.
Read the full report here: https://www.tisa.uk.com/wp-content/uploads/2024/03/Making-sense-of-SS-ISAs-1.pdf
Carol Knight CEO, TISA said: “With the continued implementation of the Consumer Duty, the Industry and regulators must take a closer look at how findings such as these, and the tangible solutions we propose, can be implemented to help improve consumer engagement in financial products, particularly for women. Lengthy or complicated documentation should never be a barrier to people trying to improve their financial journey through life.”
“As we celebrate International Women’s Day, we are calling on industry and the FCA to rethink the purpose of disclosure and transform the way consumers engage with investment products. We can and must do more to help.”
Faith Reynolds, Advisor to the Board at TISA, said: “Alongside the stubborn gender pay gap, women are time-poor and often too busy looking after others to take care of their financial futures. Placing even more unnecessary barriers in front of women in the form of complex terminology and long disclosures documentation is a problem which can and must be solved. By coordinating a joint industry effort to address these failings, we have an opportunity, this International Women’s Day to improve financial outcomes across the country, remove barriers to women and build an inclusive culture around investing.”
Minesh Patel, CEO, Amplified Global said: “Understanding complex information affects people from all walks of life and is a universal problem; no more so than in the investment world, where industry terminology is often littered unnecessarily across products and services communications.
“It’s fantastic that working with TISA and academic partners, we have been able to show that there is another way and that you can change language without losing the meaning and have a positive impact on the reader. Hats off to TISA and the project team for taking a leadership role in showing the industry the way forward.”
Theresa Clifford, Director, EY-Seren said: “Within the investment industry, not enough focus has been given to women and how they save and invest for their future. This is letting women down and we deserve better. As this research shows, we need to explore the different ways the investment industry can design products and services specifically to help women plan for a better financial future.”